By Nankwanga Eunice Kasirye
Government of Uganda has issued
five Petroleum Production Licenses to Tullow Uganda Operations Pty limited and
three other licenses to Total E&P Uganda B.V. The eight Petroleum Production Licenses have
been granted over oil fields in the Exploration Area 2 operated by Tullow and
exploration area 1 operated by Total. The licenses were granted after the two companies
earlier submitted their applications over the two areas. The areas for which the licenses have been
granted for Total and Tullow are equally shared with CNOOC Uganda Limited
The granting of these licenses also launches
the operation of an
implementation plan which was jointly
developed by government of Uganda
and the oil companies in furtherance to
the memorandum of understanding for sustainable Development
of oil and gas resources discovered in the country. The plan provides
for the three commercialization options for the petroleum resources in the
Albertine Graben which include Petroleum to power generation, Development of a refinery
and export of crude oil by pipeline or by other viable options.
The plan aimed at integrated development
of the oil fields and related projects and it describes the critical activities
to be undertaken by government and the oil companies as well as the timelines
and the interrelationships between these activities.
According to the Permanent Secretary
Ministry of Energy and Mineral Development, Dr Kabagambe Kaliisa, as one of the major objectives of the
National Oil and Gas policy of Uganda to
ensure efficient production of the country’s oil and Gas resource there was need for evaluation and application
before issuance of the licenses,
The licenses will operate for the
25 years and renewable for five more other years but commencement of work is
only after undertaking the Environment and Social Impact Assessments, Resettlement
Action Plans and Front End Engineering
and Design s for the respective licensed areas. The final investment
Decisions are therefore expected to be accomplished 18 months after the
issuance of the license therefore the First oil expected in 2020.
Dr Kaliisa says the companies are
expected to invest over US $8bn in the infrastructure required for oil
production for all the production licenses. The investment will be for the
drilling of about 500 wells, construction of central processing Facilities and
Feeder pipelines among others Government through the national Oil Company has
15% stake in each of the issued Production licenses as provided for in the
Exploration, Development and production Act 2013.
It is now estimated that all the production
licenses issued will be able to translate into between 200,000 and 200,000 barrels
of oil per day and 30,000 barrels will be refined within the country before
export and the rest will be exported through a pipeline from Kabale in Hoima
district through the port of Tanga in Tanzania.
Uganda is expected to gain
revenues through loyalties, annul fees, the state share of profit oil and
corporate income tax and the total revenue gains are estimated to amount to US
1.5billion per year for the entire duration of production the licensed fields.
The issuance of the licenses
during a period of low oil prices should benefit from low cost of services and materials
that is a result of low oil prices
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