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Total to Drill First Ugandan Exploration Oil Well by Year-End

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Total to Drill First Ugandan Exploration Oil Well by Year-End

France's Total SA is expected to drill its first oil exploration well in Uganda's oil-rich Lake Albertine rift basin before the end of this year as the company continues efforts to determine the size of oil reserves in its exploration block in the country, a company executive told Dow Jones Newswires Thursday.

Last week, Total received government approval to conduct a seismic survey and is continuing with an appraisal program for at least three oil fields in the environmentally sensitive exploration area one, a spokeswoman for Total E&P Uganda said.

"We have received an environmental permit allowing us to launch the seismic survey," the spokeswoman said. "The company will drill... up to eight exploration wells by end of 2013."

Total operates exploration one which is located in Murchison Fall National park, the country's largest national park. The company expects to spend at least $300 million on the drilling program, according to Loic Laurandel, Total E&P Uganda general manager.

In February, Total completed the long-delayed deal to acquire a one-third interest in Blocks 1, 2 and 3A, which were previously held by London-listed Tullow Oil PLC, for $1.46 billion.

Industry officials have accused the government of taking too long to provide approval for oil projects, delaying exploration and production activities.

With around 1.8 billion of untapped barrels of oil, Uganda is expected soon to join Nigeria, Angola and Sudan among sub-Saharan Africa's major crude producers. However, nearly six years after the East African nation discovered commercial oil reserves, oil production is yet to commence as the government remains embroiled in a number of disputes with companies, ranging from the oil production plans to tax disputes.

Total expects to submit a series of development plans for government approval starting in 2013 and continuing up to 2014. However, the commencement of the first oil remains uncertain, as the government continues to scrutinize a basin-wide oil development plan.

In July, the government appointed a panel to look into the oil development plans but it hasn't indicated when it expects to grant final approval for the projects.

According to Tullow, oil output from Uganda is expected 36 months after approval.

Copyright (c) 2012 Dow Jones & Company, Inc.

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