By Vision Reporter
UGANDA will use the discovered petroleum resources to modernise agriculture, the minister of Energy and Mineral Development, Eng. Irene Muloni, has said.
Agriculture is the mainstay of Uganda’s economy in terms of growth and poverty reduction. The sector employs over 75% of the country’s population (the majority of whom are in rural areas), and this makes its performance critically important for a pro-poor pattern of development. However, the sector has not received the financial support it deserves because of budgetary constraints.
This has affected its performance.
However, with the discovery of oil and gas resources, Uganda hopes that a big chunk of the oil proceeds will finance the modernisation of agriculture.
“Uganda is an agricultural country and we will use the revenues from this natural resource to create lasting value through the upgrading of our infrastructure, mechanising agriculture, increasing access to energy for the population and protecting our environment,” she said.
The minister said this while speaking at the annual energy executive conference held in Houston, Texas, US last week.
Uganda has proven petroleum resources currently estimated at 3.5 billion barrels of oil in place. The discovery was made in 2006 in the Albertine Graben.
According to World Bank estimates, Uganda could earn up to $3b from oil benefits and if well managed, it has the potential to transform Uganda’s economic and social progress.
In her remarks, Eng. Muloni noted that it is an exciting time for Uganda.
“The finding cost for oil in Uganda is $1 per barrel which is one of the lowest in the world. This coupled with a drilling success rate of above 85% makes Uganda an attractive destination for investment,” she added.
World over, the drilling success rate averages between 10%-30%.
The Government recently signed a Memorandum of Understanding with the licensed oil companies operating in the country on the commercialisation plan for the discovered petroleum resources in the Albertine Graben.
“We are in the process of developing a 60,000 barrels per day refinery through a public-private partnership and the selection of a lead investor to partner with the Government is underway and will be completed mid-2014.”
Three oil companies; Tullow, Total and CNOOC are currently licensed to undertake oil exploration with CNOOC already having a production licence.
The Parliament recently passed two pieces of legislation that among other things, provide for licensing through open competitive bidding and the establishment of a regulatory institution and a National Oil Company.
“Recoverable resources stand at 1.7 billion barrels from only 40% of the area with potential. Licensing rounds for unlicensed acreage, starting with areas that have good data coverage will be held in 2014/15. The potential for additional resources in the country is a reality,” Eng. Muloni explained.
The Government prioritised areas such as reviving old irrigation schemes, constructing water harvesting facilities and expediting rural electrification.
Uganda’s oil and gas policy goal is to use the oil resources to contribute to the early reduction of poverty and improve society’s welfare.