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More oil companies wanted for oil exploration licenses

By Vision Reporter

Added 18th May 2015 12:53 PM

Government has extended the deadline to investors seeking to submit bids for petroleum exploration licenses for six blocks in the Albertine Graben region in the country''s first competitive bidding round.

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By John Odyek

Government has extended the deadline to investors seeking to submit bids for petroleum exploration licenses for six blocks in the Albertine Graben region in the country's first competitive bidding round.

The deadline has been extended from end of May to end of June for the blocks in Western and Northern Uganda.

Fred Kabagambe Kaliisa, permanent secretary ministry of energy told the New Vision over the weekend that they had received 10 applications so far from international oil companies who have bought the request for qualification documents but they wanted more firms to participate.

Kaliisa was explaining developments in the oil and gas sector at the ministry of energy offices in Kampala.

He said six other companies had shown interest in getting exploration licenses but have not yet bought the request for qualification documents.

Kaliisa added that the bid closing deadline had coincided with two international oil conferences in USA and UK.

He said they thought it was wise to use the conferences to publicise the available licenses to attract more bidders.

The Government in February announced the country's first open competitive licensing round for petroleum exploration in the Albertine Graben where there is an estimate of 6.5b barrels of oil in place and 500 billion cubic feet of gas.

"We want to reach more investors so that they understand what we have on offer. The response we have received from the investors is good. We are also encouraging local companies to apply. We have not yet scrutinized the 10 applications to know the applicants details," Kaliisa said.

He said the fall in international oil prices has a positive and negative side to the industry. He said on the one hand contractors may quote lower prices for construction project but short term investors with small capital can be driven out of business. "Investment in oil and gas is a long term business. Investors know the price cycles, prices rise and fall," he stressed.

The six blocks up for bidding are; Ngassa (410 Km2) in Hoima District, Taitai & Karuka (565 Km2) in Buliisa District, Ngaji (895 Km2), Rukungiri & Kanungu Districts, Mvule (344 Km2) in Moyo and Yumbe Districts together with Turaco (425 Km2) and Kanywantaba (344 Km2) in Ntoroko District.

Kaliisa said oil production licenses that have been applied for by Tullow Uganda Ltd and Total E&P Uganda were expected to be issued by the end of the year.

He said government had asked the companies to increase their recovery rates and make improvements in various areas and negotiations were on going with the companies.

Production licenses issued after oil exploration have been completed and production agreements have been agreed by the company and government.

"We would like to close the discussions as soon as possible. We expect these companies to give us a report on the queries we raised this month. We are waiting for them. Government wants significant improvement in recovery rates," Kaliisa added.

He said the Petroleum (Exploration, Development and Production) Act, 2013 and the Oil and the National Oil and Gas Policy 2008 provides for licensing of areas with the potential for petroleum production in the country to be undertaken through open, transparent and competitive bidding.

He said no exploration licenses for any new acreage for exploration have not been issued since 2007.

He said China National Offshore Oil Corporation (CNOOC) Uganda Ltd that was given a production license in 2012 for the King Fisher Discovery Area was expected to produce the first oil in 2017.

He said Russia's RT Global Resources were finalizing discussions with government to build the US$4b (sh12b) oil refinery in Hoima district with the refinery being ready by 2017.

Elly Karuhanga, president Uganda Chamber of Mines and Petroleum encouraged Ugandans to participate in bidding for oil and mineral exploration licenses by partnering with big international companies since oil exploration requires hefty capital.

Jimmy Mugerwa, general manager Tullow Oil Uganda said the delayed issuing of production licenses has caused oil companies to scale down on their activities.

He cautioned that the delayed issuance of production licenses could delay oil production related activities by oil companies that applied for them.

"When a production licenses is issued, a number of activities have to take place to make the production happen," he said.  Mugerwa said the recovery rates provided by oil companies were consistent with international standards.

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