Gov’t, Oil companies reach deal on crude production

KAMPALA: The government has reached deal with foreign Oil companies on the framework of commencing commercial crude oil production in the Albertine Graben.

By 7pm yesterday, officials from the ministry of Energy, Finance, Attorney General and Solicitor General, were locked up in meeting at State House in Entebbe ostensibly to sign a memorandum of understanding spelling out the road map to start producing the 3.5 billion oil barrels--1.2 billion recoverable from ground, expected to start in “2018”.

Also present in the meeting presided over by President Museveni were top chief executives of; UK’ Tullow Oil PLC, China’ National Offshore Oil Corp (CNOOC) and France’ Total S.A.

It remained however unknown whether the MOU was signed but Energy minister, Irene Muloni, at a public function recently had maintained that: “Negotiations about the MOU are now fully complete and we anticipate its signing very soon. This is a significant milestone since the market framework is critical for the commitment of project financing.”

 Energy ministry officials acknowledged progress of the meeting with the Presidency but remained tight lipped about the developments.

Insiders in government on anonymity intimated that, “all [previously] disputed clauses had been harnessed to a 90 percent level and the remaining percentage would not hold back such a milestone. What now is remaining are the signatures."

Oil Company officials outside the meeting equally declined to discuss anything on the matter before knowing fully the MOU has been signed while Presidential Press Secretary, Linda Nabusayi, could not be immediately reached by phone.

The MOU was envisaged in 2012 but negotiations thereafter hit gridlock over three clauses on, [oil] infrastructure, stabilisation [clause] and development of oil fields.

It  details a value chain in which the upstream production will feed into an optimally-sized refinery, a crude export pipeline between Hoima and Lamu [corridor in Kenya] and a crude to power plant for electricity generation ]expected] to produce up to 5OMegawatts in Phase 1.

Plans to construct a midsize 30,000 barrels-per-day refinery at $3 billion are ongoing in Hoima district to reduce on the importation of oil products estimated at 15percent of all imports at 400 million dollars per year.

No progress has however been reported on the oil export pipeline project.

Government recently awarded Cnooc with a $2 billion production licence for Kingfisher field estimated to hold 635 million barrels, of which 196 million barrels are recoverable.

Side bar

10 production licence applications from Total and Tullow are currently under review.