Investors prepare finance plans as Uganda’s oil sector reawakens

Irene Muloni, Minister of Energy and Mineral Development, Uganda.

Irene Muloni, Minister of Energy and Mineral Development, Uganda.

19 September 2016, Kampala – A lot more attention is expected to be placed on how companies source for finance to invest in Uganda’s oil industry after government created nearly all the necessary structures for an industry that has been quiet for far too long, writes EDWARD SSEKIKA.

After three years of subdued activity, Uganda’s oil and gas sector is back on track. Recent developments, where oil licenses have been issued and heads of institutions appointed, are set to spark off some activity in a sector that had gone literally into limbo. Recently, Energy Minister Irene Muloni issued eight production licenses to Tullow Operations Pty Ltd and Total E&P Uganda BV.

The minister issued five production licenses for Tullow and three for Total. The licenses are in respect of Mputa-Nzizi-Waraga, Kasemene-Wahrindi, Kigogole-Ngara, Nsoga and Ngege fields in Exploration Area 2 (EA2). Total, on the other hand, was awarded exploration licenses for Ngiri, Jobi Rii, and Gunya fields in Exploration Area 1 (EA1).

The issuance of the production licence puts back on course the country’s hopes of having its ‘first oil’ by 2020. The award of production license follows a conclusion of the evaluation of the application for production licenses over these fields submitted by Tullow and Total to the ministry of Energy and Mineral Development about three years ago.

The joint venture companies, in their joint statement, welcomed the issuance of the licenses.

“The joint venture partners are, indeed, grateful to the government of Uganda for the approvals granted that will now enable us to proceed with activities required to make a final investment decision for the integrated Lake Albert project. This approval marks a major milestone towards the production of Uganda’s oil resources,” the statement reads.

The companies added: “It complements the production licence issued to Cnooc Uganda Ltd as the operator of Exploration Area 3 (Kingfisher) and the important decision made to export crude oil to the international market through a 24-inch, 1,443km pipeline from Kabaale to Tanga port. The granting of production licenses now paves way for the joint venture partners and other stakeholders to make considerations for significant long-term capital and infrastructure investments in Uganda.”

Government is also expected to issue oil exploration licenses soon to four companies that were selected after the country carried out its first competitive bidding round. Government is already in negotiations with three oil companies over production sharing agreements in at least five oil blocks.


  • The Observer
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