The government has been banking on the Joint Venture Partners, Tullow, China National Offshore Oil Corporation-CNOOC and Total to make a Final Investment Decision with regard to the project, to unlock value in the countrys oil and gas sector.
The announcement came just few hours after an international maritime tribunal backed cleared Ghana of allegations that it was drilling for oil within Ivory Coast boundary cutting through lucrative offshore oil fields.
The signing of the Production Sharing Agreement and grant of Petroleum Exploration License will have Armour Energy Limited as a newcomer in Ugandas oils oil and gas sector. It is one of the three companies that made it to the last round of the first competitive licensing process which opened in February 2015.
Energy Minister, Irene Muloni, says four companies had submitted bids from the project, but two of them were dropped. She declined to reveal the names of the shortlisted companies, saying they will announce the winner by the end of June.
The appeal comes barely two months after oil exploration giants Total, CNOOC and Tullow developed Ugandas Albertine Graben land acquisition and resettlement framework bringing the country another step closer to exploiting its vast oil reserves.
The amount of oil Uganda can recover has grown marginally in 2014, according to Ernest Rubondo, the Commissioner, Petroleum Exploration and Production Department (PEPD). Uganda now boasts of 1.4 billion barrels of oil that is recoverable, up from 1.2 billion barrels. This, even after the available oil in the ground grew by 85 percent to 6.5 billion barrels. The amount recoverable means the oil Uganda can sell commercially and extract from the ground.
The two entities â€˜Tullow and Heritage Oilâ€™ have been engaged in legal battles arising from a deal that was struck in 2010 which saw Tullow agree to pay Â£1.45billion to buy Heritage\'s assets at the Lake Albert basin. The basin is estimated to hold about one billion barrels of oil.