By James Okello
Following the discovery of 6.5 Proven billion barrels of oil in Uganda a decade ago, France’s Total, Australian DGR Global, Nigerian PetrolAfrik Energy Resources, and Uganda National Oil Company have been shortlisted for exploration of new potential oil deposits in the Western region.
Mediaspace News understands that this heightened interest has also forced the Ugandan government to beef up security in the are mainly in the Albertine graben where oil deposits have been proven.
Uganda’s counterterrorism support for neighbouring DRC is primarily aimed at protecting Lake the nascent oil infrastructure in the area and companies such as Total set to recoup over three billion dollars on the development of the Tilenga project, the Ugandan president Yoweri Museveni having conceded to all of the demands of the French oil major to ensure that production begins before the end of his term in 2026, Africa Intelligence reports.
Total, which recently changed its name to TotalEnergies, has a presence in the country with a presence in Uganda for five years after it was awarded a license to develop several fields that are currently the only producing fields in the country. These are estimated to contain some 6.5 billion barrels of crude. Total is developing them in partnership with Chinese CNOOC. Uganda National Oil Company is state-owned.
According to the Down Jones, Uganda shortlisted the four companies for an exploration round following its second oil exploration tender ever. The tender involved five oil blocks along Uganda’s border with Congo, where oil has already been discovered
Oilprice.com reports that the French supermajor is also participating in the East-African Crude Oil Pipeline (EACOP): a 1,443 kilometer-long (897 miles) pipeline expected to transport oil from Uganda to the Tanga port in Tanzania. Total’s subsidiary, Total East Africa Midstream, is the developer of the project.
MediaSpace News understands that the pipeline, which will be the largest in Africa, is part of Uganda’s comprehensive plan to develop its oil resources. Oil sector watchers tell us that later this year, the Ugandan government plans to launch tenders for the construction work on the infrastructure along with a refinery.
On the production side, Total and CNOOC earlier this year inked a deal with the Ugandan and Tanzanian authorities to advance production at the Lake Albert project, which currently involves two fields. Production from these is seen at 230,000 bpd when it reaches its plateau, according to Total, reports oilprice.com.
Uganda is a new comer to the oil world but an ambitious one. These ambitions have understandably sparked criticism from environmentalist groups warning the pipeline project will never pay for itself because of declining oil consumption or contribute to climate change.
The Albertine graben is estimated by the World Bank to range from 120,000 to 140,000 barrels per day, with a production period spanning 30 years.
On the 11th of April, 2021 Uganda’s Oil Industry marked a major milestone when President Museveni, his Tanzanian counterpart H.E. Samia Suhulu Hassan and the Total Chief Executive Officer, Mr. Patrick Pouyanne, signed agreements, which could potentially transform Uganda into a major crude producer and into the lofty middle-income economy.
The agreements were signed 15 years after the Country registered the first commercial discoveries. The Total CEO called the signing of these agreemnts a historic milestone for the production work and export pipeline that will draw more than $ 10 billion of investment. Our own estimates as a Country are that oil revenues have the potential to generate a wind-fall of $ 50 billion out of the 1.4 billion barrels of oil that can be recovered. With Uganda’s Gross Domestic Product (GDP) currently standing at $ 32 billion, if the oil revenues meet the projections, they will outstrip GDP and provide an impetus for economic growth and debt sustainability.
In August 2020, Uganda ratified the Extractives Industries Transparency Initiative (EITI) which is one of the most reliable safety nets globally to ensure that the oil and gas industry benefits are managed in in the most transparent and accountable manner. EITI implementation will require Uganda to publicly disclose information such as production sharing Agreements (PSAs), beneficial owners, revenue and payments including payments related to the environment.
According to EITI, Uganda is set to become one of the largest oil producers in East Africa. The country has discovered commercially recoverable oil reserves, with current oil exploration work taking place in the Albertine Graben region. Uganda’s proven crude oil reserves stand at 6.5 billion barrels with 1.4 billion barrels that are commercially recoverable.
On 28 January 2019, the Cabinet of Uganda approved the decision to apply to join EITI. Uganda aims to use EITI membership to strengthen efforts in ensuring overall transparency in the sector, strengthen tax collection, improve the investment climate, build trust and create lasting value from petroleum and mineral resources.