Business
Uganda looking to start oil production by 2018
Oil rig in Uganda. PHOTO/Tullow Oil
Uganda finally took the first baby steps towards oil production with the assigning of a production licence to the China National Offshore Oil Company, CNOOC.
Following the agreement announced by the east African nation’s Ministry of Energy on Wednesday, Uganda now expects commercial extraction of its 1.8 billion barrel oil resource to begin in early 2018 from the King Fisher field.
The development is the culmination of 10 months of negotiations between Uganda and the oil consortium led by Tullow Oil that also includes French oil giant Total and CNOOC, on the field development plan and petroleum reservoir report.
Uganda expects to issue more production licences in the near future for 8 oil fields. Tullow Oil has already presented its field development plan for 2 fields — the Mputa and Waraga fields — which the government is scrutinizing.
Last year, Uganda issued Tullow Oil a production licence, which farmed down its shares to CNOOC and Total. The conditions to the licence were that the company submit an updated field development plan and petroleum reservoir report that was acceptable to the government.
According to the country’s Minister of State in charge of mineral development, Peter Lokeris, the field development plan and the petroleum reservoir report were agreed to and the conditions on the production licence were lifted, thereby marking the entry of Uganda into the development phase of the “petroleum value chain”.
Although CNOOC operates the King Fisher field, Tullow Oil and Total Exploration and Production Company own equal shares in the field. The partners will invest US$2 billion to develop the field in preparation for actual production.
