Uganda completes appraisal of 11 oil fields

May 28, 2014 | Africa, Drilling / Completions

Kampala, Uganda | – Uganda’s energy and minerals ministry said Wednesday that oil companies have completed appraisal activities for at least 11 oil fields out of the 21 discoveries, bringing the east African nation closer to the start of commercial crude production.

The ministry said that investments in oil exploration and appraisal activities increased to $2.4 billion, higher than the previous estimate of $2 billion, as companies step up efforts to develop the vast oil fields.

The completion of appraisal activities is a major step forward for the country’s fledging oil sector, whose development has been held back for years amid a range of hurdles, from tax disputes with oil companies to disagreements over oil development plans.

“Appraisal of six other discoveries is ongoing and expected to be concluded during 2014,” the ministry said in a news release. “Exploitation of these resources will contribute to the take-off and social economic transformation of the country.”

At least four of the discoveries will be available during the next licensing round through an open competitive bidding process, by the end of the year, according to Peter Lokeris, Uganda’s junior energy and minerals minister.

A production license for one of the oil fields was granted to CNOOC Ltd. last year, while applications for 10 others are being considered, according to Mr. Lokeris. U.K.-based Tullow Oil Plc has applied for at least eight licenses while France’s Total SA is awaiting approval for two applications.

Oil companies will build a 1,200-kilometer export pipeline from the landlocked nation to the East African coast. The pipeline is expected to eventually be linked with oil fields in South Sudan to give the world’s youngest nation a second export route for its crude.

Currently, South Sudan relies on pipelines that straddle through its former civil war foe Sudan to export its crude.

With discoveries of at least 3.5 billion barrels of crude, Uganda has Sub Saharan Africa’s fourth-largest crude reserves, behind Nigeria, Angola and South Sudan.