Oil reserves in Uganda's three blocks along the Lake Albert basin could be at least 6 billion barrels up from the current estimate of 2 billion barrels once appraisals are completed in around two years time, the energy minister told Dow Jones Newswires Thursday.
Oil reserves in Uganda's three blocks along the Lake Albert basin could
be at least 6 billion barrels up from the current estimate of 2 billion barrels
once appraisals are completed in around two years time, the energy minister
told Dow Jones Newswires Thursday.
In an exclusive interview, Hilary Onek said appraisal of oil fields in blocks
1, 2 and 3A is set to start to establish the exact size of the reserves, which
are expected to rise to 6 billion to 8 billion barrels. The three blocks are
currently licensed to U.K.-based Tullow Oil PLC (TLW.LN) and Heritage Oil PLC
(HOIL.LN).
"Oil wells drilled so far in the blocks have returned 94% discovery rates,
the potential is enormous," he said.
Oil has been discovered in 32 out of the 34 wells drilled since 2006 with less
than half of the oil fields drilled, he added.
Occurrences of oil were easily detected in the Albertine basin because of its
location in
East Africa
's western rift valley, he
said.
More oil is expected to be discovered in
Uganda
's
northern and northwestern regions and exploration activities will take place
there in the future, the minister said.
Appraisals will involve drilling more fields in the three blocks both onshore
and offshore.
Uganda
is
expected to start oil production in the next two to three years and Onek
expects the country to have a 150,000 barrels-a-day refinery in place as well
as an export pipeline to the
Indian Ocean
by
2013-2014.
Uganda will need to put in place infrastructure, like road and rail lines, in
the oil region ahead of production and the government is considering building a
second oil pipeline to link the area to Rwanda, Burundi and Tanzania once the
country reaches full-scale output, Onek said.
Uganda
is
currently drafting a new oil law, to be tabled later this year which will provide
for the establishment of among others a national oil company to manage the oil
resource. The new law will also pave the way for the licensing of the remaining
five blocks in the Albertine rift, he added.
The government is evaluating the proposed acquisition of Heritage Oil's
interests in blocks 1 and 3A by Italy-based Eni SpA (E), Onek said, which is
being contested by Tullow.
"As government, our main aim is to ensure that the cost of investment in
exploration remains the same," he said, adding that the interest of larger
companies like Eni in
Uganda
shows
its potential.
Government officials say that 60 international companies have already expressed
their interest in exploring for oil once the new licensing round resumes. London-listed
Cairn Energy PLC (CNE.LN) is among the companies interested.
Sourav Das, the senior manager in charge of corporate communications at Cairn
India Ltd. (532792.BY), a unit of Cairn Energy, told Dow Jones Newswires in
Kampala that Uganda's oil region has a lot of similarities with the Rajasthan
oil project, where Cairn is developing a 600-kilometer reverse flow pipeline
from the Mangala field to the Gujarat coast at a cost of $1 billion.
"Like the oil from the Mangala field,
Uganda
's oil
is waxy and requires heating to be pumped through a pipeline," he said.
Cairn executives are in the country but Das declined to give more details of
their visit.
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