Uganda issues first oil and gas production license to CNOOC

25th-09-2013    

By Nankwanga Eunice Kasirye

The government of Uganda has awarded the first oil production license to China National Offshore Oil Corporation (CNOOC) for the Kingfisher oil field. Kingfisher is the most prospective area for petroleum production in Uganda’s nascent oil and gas industry.

A Production license is awarded when an oil firm demonstrates to the government that it understands the oil field it will operate. China National Offshore Oil Corporation (CNOOC) will  now start preparing its Kingfisher field for four years before it starts oil production and it says this will take up at least $20 billion.

The issuance of the license means Uganda is progressively moving into the production stage expected to begin in 2017. The King Fisher oil field is estimated to hold 635 million barrels, with 196 million barrels recoverable. When production begins, CNOOC is expected to take out 30,000 to 40,000 barrels per day. Oil production will come along with associated gas, some of which will be used to generate electricity fror use in the field.

CNOOC got the production license after government lifted the conditional production license it had imposed on Tullow Oil, the original licensee over a field development plan and petroleum reservoir report. CNOOC  submitted a revised plan in November last year, and upon comprehensive reviews and studies, government was satisfied. 

Government will have a 15% stake in this license. The king fisher oil field is subdivided into sixteen exploration areas , four of these are licensed  to four oil companies:  Tullow Uganda Limited, Tullow Uganda Oil,  Total E and P Uganda BV and CNOOC Uganda Limited.

 Meanwhile, government is in advanced stages its plans to construct a refinery to process the crude oil and produce petroleum products.  An advisory has been identified to help in procuring the lead investor who will have a 60% stake in the refinery. The procurement process is expected to begin in two weeks from now.The government of Uganda will  share the remaining 40%  with  other East African Community member states who will have interest in the refinery.