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Uganda's First oil set for 2020

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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