Uganda owes oil firms $492m in PSA funds

04 April 2012, Sweetcrude, KAMPALA – The Ugandan government is owing oil companies operating in the country, including UK independent Tullow Oil – the company that discovered the country’s first oil – at least $492.5 million for exploration activities.

Report citing the country’s auditor general says the funds is for oil exploration by the companies along the country’s western border with Congo.

Specifically, the amount was invested by oil exploration companies in the Lake Albertine rift basin and is expected to be recovered on the start of oil output under the terms of production sharing agreements (PSA) signed between companies and the government, the auditor general said in a report.

Oil exploration over the past eight years has found commercial oil and gas reserves in Uganda’s Lake Albertine rift.

Uganda has so far discovered around 1.5 billion barrels of oil in three blocks operated by Tullow and estimates reserves at 2.5 billion barrels of oil.

In February, Tullow completed the much-delayed $2.9 billion sale of a third of its stake in the three blocks to France’s Total and CNOOC Ltd of China.

The deal is expected to pave the way for the development of the oilfields, where production is expected to hit as much as 350,000 barrels per day by 2018, according to company officials.

Uganda’s junior energy and minerals minister Peter Lokeris told Dow Jones Newswires that talks between the government and oil companies over the construction of a refinery and a 1300-kilometre export pipeline to the East African coast are in the final stages.

“We are still discussing the shareholding structure of the refinery with the companies,” he said, adding that a national oil company will be set up to take care of the government’s stake in the oil projects.

Uganda expects to auction five unlicensed oil blocks later this year. Other explorers operating in the country include Dominion Petroleum and London-listed Tower Resources.

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