Uganda signs agreement with three companies to produce oil

uganda IPS inter press service flickrUganda discovered oil in the Albertine Graben basin in 2009, but production and commercialisation was delayed because of its insistence to refine oil before exportation. (Image source: IPS Inter Press Service/Flickr)Uganda has struck a deal with three oil majors, Britain's Tullow, Chinese National Oil Offshore Company (CNOOC) and France’s Total, for commercial production

The country discovered oil in the Albertine Graben basin in 2009, but production and commercialisation was delayed because of the Ugandan government's insistence to refine oil before exportation.

Irene Muloni, minister for energy and mineral development of Uganda, said, “The conclusion of the memorandum of understanding (MoU) is a significant step for Uganda as it gives a road map for achieving a harmonised commercialisation plan for the development of the discovered oil and gas resources in the country."

The terms of agreement outline that the commercial production of oil includes the use of hydrocarbon deposits for gas resources, provision of oil to the refinery (which the country will build) and the exportation of oil through a pipeline that will be built by partnering oil companies.

The refinery is not expected to start operations until 2017 and is estimated to produce an initial 30,000 barrels per day (bpd), the figure doubling to 60,000 bpd after a few years.

Jimmy Mugerwa, general manager, Tullow Uganda described the event as a “key milestone in the transition of Uganda’s oil industry from the exploration phase to the development phase”.

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