Uganda to Resume Oil Exploration Licensing in Albertine Rift

KAMPALA (Dow Jones Newswires), Feb. 2, 2011

Uganda will open a new round of licensing for oil exploration companies to operate in its oil-rich Lake Albertine rift basin later this year as it seeks to accelerate the development of its oil sector, Uganda's prime minister said Wednesday.

Apollo Nsibambi told the East African Petroleum Conference in Kampala the government intends to license the remaining five blocks in the Lake Albertine Rift basin to new players in a bid to exploit the potential of the rift basin.

"Only five blocks have been licensed and to date, 2.5 billion barrels of a oil have been discovered," he said.

The upcoming exploration will be Uganda's first since it introduced a licensing ban on new players in the oil sector in 2007 to put in place a regulatory framework for the sector following the confirmation of commercial oil reserves.

Uganda's permanent secretary at the ministry of energy and minerals development Fred Kalisa Kabagambe said separately that the new licensing will be conducted on a basis of competitive bidding unlike in the past where it was offered on a "first come first served basis".

"Apart from the existing five blocks, new players will also be licensed relinquished acreage from the existing licenses," he said adding that the government will re-license some of the areas in the existing licenses, where exploration has not yet been carried out.

The government is also preparing two separate pieces of legislation this year, one for the management of the resources and another to regulate the management of oil revenues, Kabagambe added.

Nsibambi said that government is also looking at entering "genuine" and "transparent" partnerships with international companies into all segments of the oil industry.

"We want genuine partnerships, and if taxes accrue, private companies must pay," he said.

Since last year, Uganda has been embroiled in a tax dispute with Heritage Oil over the company's sale of its 50% stakes in two oil blocks to U.K.-based Tullow Oil.

The dispute has since delayed Tullow's plans to sell part of its Uganda assets to Total and CNOOC.

Nsibambi said East African member states have already agreed to enhance cooperation in oil exploration and develop relevant infrastructure.

He cited some of the regional projects that are considered for implementation as the Kampala-Kigali oil pipeline and the Dar Es Salaam-Mombasa natural gas pipeline.

According to Nsibambi, the East African Community member states, which include Uganda, Tanzania, Rwanda, Burundi and Kenya have at least 28 oil and gas exploration sediments but limited exploration and licensing has so far taken place.

"In Uganda, there are six sediments but exploration has only been carried out in one--the Lake Albertine Rift basin," he said. Other sediments include Lake Kyoga Basin, the Lake Victoria Basin, the Wamala basin, the Hoima basin and the Gulu basin.

Copyright (c) 2011 Dow Jones & Company, Inc.


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