Uganda earns US$2 million from oil discoveries

jack  Paul LowryThe Lyec discovery came after Total drilled three dry wells in the exploration area. (Image source: Paul Lowry/Flickr)Uganda has announced that it has earned US$2mn from recent oil discoveries in block-I, northern Uganda

The oil was discovered by Total, which has license to operate in the exploration area.

Permanent secretary of the Ugandan Ministry of Energy and Mineral Development Fred Kabagambe-Kaliisa said, “The discovery bonus is in relation to the discovery of the Lyec field on 31 December 2012.”

In paying the discovery bonus, Total, on behalf of its partners CNOOC and Tullow, was fulfilling the provisions of a production sharing agreement signed on 3 February 2012.

Kabagambe-Kaliisa said, “This particular agreement required the companies to pay US$2mn bonus for each discovery made within the one year licence.

“The period of one year was in compensation for the exploration time, which was lost when negotiating Tullow’s acquisition of UK-based oil firm Heritage’s assets in the area,” he added.

The production sharing agreement was signed for Exploration Area 1A in the Pakwach Basin for a period of one year and Total was selected as an operator to undertake exploration in the 3,058 sq km area.

The discovery well Lyec-1, drilled to a total depth of 290 metres, encountered oil in a gross interval of 43 metres and a net interval of 12 metres. The discovery followed the announcement from Total that it had previously drilled three dry wells in this exploration area.

A similar condition of payment of a US$2mn discovery bonus has also been agreed between the government and CNOOC, Total and Tullow for the Kanywataba prospect license in the Semliki basin.

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