Uganda has issued production licences to Tullow Oil and Total signalling the beginning of the commercial production of the crude oil deposits discovered in the east African nation in 2006.
Government geologists estimate the country’s reserves at nearly seven billion barrels in the fields located near Uganda’s border with the Democratic Republic of Congo.
Uganda’s oil fields are jointly owned by Total, Tullow Oil and China’s CNOOC which was the first company to be granted a production licence in 2013.
UK’s Tullow has been granted five licences covering Exploration Area 2 (EA2) which it operates with Total from France receiving three for Exploration Area One (EA1).
Tullow Oil and Total are required to make final investment decisions 18 months from the date of receipt of the licences.
The two companies are expected to invest a total of $8 billion in infrastructure to aid production including drilling wells and constructing processing facilities and feeder pipelines.
Making the announcement, Uganda’s Energy Minister Irene Muloni also revealed the government’s plan to build a domestic refinery to process the country’s crude with the aim of processing 60, 000 barrels daily.
When production at all licensed areas starts, the output is expected to increase to more than two hundred thousand barrels per day.
The licences which are valid for 25 years can be renewed for an additional five years.
Commercial production of Uganda’s crude is expected to begin in 2020.
Source: Footprint to Africa