Preview into Uganda’s Oil and Gas Sector

Uganda’s oil and gas sector has since the discovery of oil in 2006 transitioned from the exploration and appraisal phase to the development phase as the country prepares for sustainable production of the petroleum resources.

A number of oil companies are currently licensed in the country to undertake petroleum exploration, development and production in the Albertine basin including: – China National Off shore Oil Corporation Uganda Limited (CNOOC (U) Ltd), Total E&P Uganda B.V and Tullow Uganda Operations Pty Limited.

Uganda expects other significant investors to join the sector during 2015/16 when:

  1. the procurement of a lead investor for the development of a refinery and its attendant infrastructure in the country is concluded
  2. new licensees come into the country at the conclusion of the first competitive licensing round and
  • the subcontractors and service providers who will come into the country to support the development phase for the oil fields, development of the refinery and construction of pipelines and other facilities.

To date over thirty (30) seismic surveys have been undertaken in Uganda resulting in the acquisition of 7,254.6 line Kilometres of Two Dimensional (2-D) seismic data and 1,948.6 square kilometres of Three Dimensional (3-D) Seismic data.

oil discoveries Uganda

The country has also seen the drilling of one hundred and twentyl (120) exploration and appraisal wells with one hundred and six (106) of these wells encountering oil and/or gas resulting to a drilling success rate of over 85%.

The drilling has led to the discovery of twenty one (21) oil and/ or gas fields in the country’s Albertine Graben with the appraisal of these discoveries has established that petroleum resources in these fields are now estimated at over 6.5 billion barrels of oil equivalent in place, with 500 billion standard cubic feet of gas. Of 6.5 billion barrels of oil in place, 1.4 billion barrels of these resources estimated to be recoverable.

As per the end of 2014 the cumulative foreign direct investment in petroleum exploration in the country since 1998 was estimated to be USD 2.8 billion which is projected to be over USD 3 billion at the end of 2015.

Higher investment is sector is expected once Uganda enters the development, and subsequently the production, transportation and refining phases of the petroleum value chain.

In the legal part two new laws were enacted including the Petroleum (Exploration, Development and Production) Act 2013 and the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act 2013.

Other related legislation include the Public Finance Act 2015 enacted during March 2015 providing for among others the management of revenues accruing from petroleum activities

Regulations to operationalize these laws have been drafted and these include Technical aspects like metering, National Content together with Health, Safety and Environment aspects for both the Upstream and Midstream Sub-sectors.

According to one of the main players in Uganda the country could start producing oil three and a half years after project sanction expected by the end of 2016.

Source: Ministry of Energy and Mineral Development

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