Uganda Issues 8 production licences to Tullow and Total E&P

Uganda’s minister for energy and minerals Eng Irene Muloni, has issued 8 production licences to Tullow and Total E&P. Muloni re-echoed the need to fast track the production which she says is expected to start by 2020.

Speaking during the signing of the addendum to existing Production Sharing Agreements for Tullow, CNOOC & TOTAL E&P ceremony in her office Muloni says the revenue will be ploughed into other sectors to develop Uganda and urged Ugandans, to get ready to partake in the participation of the industry.

As per the government estimates the three companies are expected to invest $8 billion in oil infrastructure and the country expects an average of $1.5 billion annually as revenue from the licenses during the production period.

Muloni urged the companies to expedite with construction especially now that all prices are low offering a chance for them to see reduced expenses as demand for materials remain low in this environment.

The issuance follows an approval by the Uganda cabinet in early August for consideration and approval of a request from the minister of energy to issue three petroleum production licenses to Total E&P UGANDA B.V.

The three production licenses approved covered discoveries in exploration area 1 of the albertine graben, that is, Ngiri, Jobi-Rii and Gunya to be operated by total E&P Uganda B.V.

According to the cabinet statement the production licenses would be issued for a duration of 25years with the option of being renewed for an additional 5 years as provided for in the Production sharing agreement(PSA).

The final investment decision is planned to be taken in 18 months after issuance of the production licenses and first oil is expected in the financial year 2019/2020.

The other blocks held by the three companies in Uganda include EA-1 (operator), partner in the EA-2 block operated by Tullow Oil, and the EA-3 production block operated by CNOOC, which includes the Kingfisher field, for which the government approved the development plan in 2013.

The Petroleum Authority of Uganda will regulate the licensed companies while the National oil company will participate in all licenses to take care of government’s commercial interests.

Uganda expects the flow of its 1.7 billion barrels of recoverable crude oil reserves to begin in 2020.