Cabinet Clears Total E&P Oil Production License

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Total Exploration and production Uganda will operate at Ngiri, Jobi-Rii and Gunya all in the Albertine Graben. The approval of a production licenses is a final phase towards commercial oil production which cabinet has pushed to financial year 2019/2018
03 Aug 2016 17:56
Total Group Chairman, Patrick Pouyanne meeting President Museveni at the peak of Presidential Campaigns this year.

Cabinet has finally agreed to issue three petroleum production licenses to Total Exploration and Production Uganda.

A statement issued by Information and ICT minister Frank Tumwebaze says a cabinet meeting today approved a request by Energy Minister, Irene Muloni to allow her issue three production licenses.

Total Exploration and Production Uganda, according to the Cabinet resolution will be issued production licenses for Ngiri, Jobi-Rii and Gunya all in the Albertine Graben.

The production licenses, according to the statement, will have a duration of 25 years and can be renewed for an additional five years as provided for in the Production Sharing Agreements (PSA) that Total E&P Uganda signed with government.

The licenses provide that where there are oil fields which extend across boundaries of license areas, it's agreed that these oil fields will be developed as one unit.

The final investment decision is planned to be taken in 18 months after issuance of the production licenses and first oil is expected in the financial year 2019/2020.

The Petroleum Authority of Uganda will regulate the licensed companies while the National oil company will participate in all licenses to take care of government's commercial interests.

Government in March said it had received seven bids for six oil exploration blocks offered in the last licensing round. The six exploration blocks cover a total of 3,000 square kilometres.

The blocks on offer included Ngassa, Tai Tai & Karuka, Mvule, Turaco, Kanywantaba and Ngaji. At the time of biding, government said they were targeting commercial oil production by 2018 but the timeline has now been shifted to 2020.

Only seven out of the 16 companies submitted final bids according to a statement from the Ministry of Energy. The companies came from Australia, Nigeria, Canada and the United States.

The decision to issue production licenses to Total E&P comes just after the establishment of the Petroleum Authority.

The Authority, according to the recently enacted Petroleum Act, is  charged with monitoring, regulation  of oil activities, administering petroleum agreements, and ensuring that licenced oil companies uphold laws, regulations, rules and contract terms.

The Petroleum Authority of Uganda headed by Dr. Jane N. Mulemwa has seven members. Other members include Reuben Kashambuzi, Dr. Immaculate Semanda Nakimera, Peter Lominit, Doreen Kabasindi Wandera, Eng. Patrick Nakoko and Kiryowa Kiwanuka.

The National Oil Company Limited was also established and registered mid last year charged with a mandate to carry government during the exploration and production phases of oil.

The Oil Company Board is chaired by Emmanuel Katongole while its Chief Executive Officer is Dr. Josephine Kasalamwa Wapakhabulo. 

The Ministry of Finance in June this year allocated $56.2 million towards Oil, Gas and Mineral Development and institutional and skills development including operationalising the National Petroleum Authority and establishment of the National Oil Company.

The issuance of the production license to Total E&P will mark the final phase towards commercial oil production. Uganda's Petroleum resources are now estimated at about 6.5 billion barrels of oil.

Total E&P successfully convinced Uganda to construct an oil pipeline from Hoima through Tanzania.

In April this year, President Museveni and his Kenyan counterpart Uhuru Kenyatta agreed to pursue two separate crude oil export pipelines for the development of Kenya's South Lokichar oil fields and Uganda's Lake Albert oil fields.

The Uganda pipeline route will be from Hoima to the Tanzanian port of Tanga. The pipeline development is being led by Total and the Government of Uganda.

Total Exploration and Production Uganda is yet to issue its statement about the outcome of the cabinet meeting today.