Uganda grants licenses to Tullow Oil and Total

Uganda Kampala rooftops by Shack Dwellers International 6058473267 8cd8f94b70 oRooftops in Kampala, Uganda (Image source: Shack Dwellers International)Uganda is clearing hurdles to become a major commercial crude oil producer, according to a Reuters report

Uganda granted five production licenses to UK-listed Tullow Oil and three to France's Total. This is in an effort to move the East African nation quickly towards crude oil production, as Elias Biryabarema reported for Reuters on 30 August 2016.

Production has been continually delayed since the initial commercial oil reserves were discovered over a decade ago. This has been a result of taxation issues and field development strategy interruptions. 

The eight licenses covered two areas: Exploration Area One (EA1) which is operated by Total, and Exploration Area Two (EA2) which is the Tullow operation. Irene Muloni, Energy Minister of Uganda told reporters that "now [is] time for serious work to start. 

"The grant of these production licenses will trigger the immediate work programme... for production of petroleum in Uganda."

Tullow Oil and Total own the oilfields along with China's CNOOC. The Chinese firm was first granted a production license in 2013. These licenses are valid for 25 years with the possibility of being extended by an additional five years. Both Tullow and Total now have eighteen months to make a final investment decision and Muloni said that production should begin in 2020. These nine total licensed areas should be producing between 200,000 and 230,000 barrels a day. 

Uganda is looking into building a US$2.5bn refinery to process the crude oil so it can earn more from its resources. Efforts to a secure private developer and operator of the facility are underway. 

Tullow and Total are expected to invest around US$8bn in infrastructure to support the oil production, which includes the drilling of around 500 wells and building processing facilities and feeder pipelines. Government geologists estimate that Uganda has around 6.5bn barrels worth of reserves in the fields located near its border with the Democratic Republic of Congo. 

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