At last, Uganda is open for business

19 June 2015, News Wires – Uganda will, by the end of 2015, have a clutch of new players on the block, ending a seven-year ban on fresh licensing which has had suitors waiting patiently in the wings to pitch up on one of Africa’s last petroleum frontiers — the Great Lakes.

Uganda Energy-Minister-Irene-MuloniOnce pipeline infrastructure is in place, developments around Uganda’s Albertine Graben may galvanise E&P across the wider region.

Energy & Mineral Development Minister Irene Muloni aims to sift through bids by the autumn, selecting new investors to join the triumvirate of operators already active on Lake Albert — Tullow Oil, Total and China National Offshore Oil Corporation.

It’s been a long haul. Australian explorer Hardman Resources first signed up in 1997 but didn’t strike commercial oil until Mputa-1 penetrated shallow reservoir sands back in 2006, triggering high hopes of a bonanza among a population wracked by poverty and economic mismanagement.

Heritage Oil was present from the outset, soon joined by a handful of minnows keen to prove the prospectivity of what many still dismissed as a forlorn, landlocked play, unlikely to deliver much beyond a few pockets of heavy oil in game reserves and other inaccessible places.

True, finds were concentrated in the Central Graben, while efforts to replicate early success in the neglected northern reaches beyond Murchison Falls and around Lakes Edward and George continued to disappoint.

But as reserves mounted, faith grew steadily in what remains one of Africa’s lowest- cost environments.

Great expectations demanded skillful management as inexperienced officials struggled to hammer out an oil and gas policy to guide the fledgling industry through changes that would lock politicians and activists into interminable debates over how best to avoid the oil curse.

Now, most of the legislative pieces are in place, with parliament left to pass regulations to shore up the model petroleum agreement and fill the gaps left in the statute.

“Stakeholders are reviewing proposals, and the government is on schedule to take consultations in readiness for the award of six new licences later this year,” says a leading oil attorney and advisor to the parliamentary drafting committee.

The significance of this week’s roadshow hitting London’s East End is lost to no one.

“The doors have been thrown open in Ugandan oil and gas and we’re about to make the grand entrance,” says former Tullow Uganda president Elly Karahunga, a two-term legislator turned businessman and advisor to Uganda President Yoweri Museveni.

Questions remain over onerous taxation of exploration operations and Museveni regrets inordinate delays in issuing production licences to Tullow and Total. The all-important 60,000 barrel per day Hoima refinery contract award to Russia’s RT Global has almost reached cabinet for approval.

Karahunga says: “We’re sorry we took so long, but we acted deliberately and with caution.”

Meanwhile, a ministerial delegation arrived last week to follow up on co-operation agreed under the Ngurdoto-Tanzania Agreement with the Democratic Republic of Congo — oil structures straddle the poorly-delineated boundary and it had been feared the two countries might slide into conflict over title.

But that is now a dead duck, says Karahunga, and Muloni agrees, suggesting the DR Congo might even participate in the Northern Corridor pipeline, a $4.5 billion scheme to transport crude to the Indian Ocean port of Lamu.

It is envisaged that nascent infrastructural plans might expand to encourage exploration from South Sudan through the Cuvette basin and the southern Great Lakes region, with Ugandan production expected in 2018 — just when crude prices are expected to recover.

“It’s all positive from now on,” says Karahunga.

Let’s hope he’s right.


– Barry Morgan, Upstream

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