KAMPALA, Uganda - Investment in oil exploration activities in Uganda's Lake Albertine Rift basin has reached at least $1.7 billion as oil companies continue efforts to determine the exact size of the East African nation's crude reserves, Uganda's energy and minerals ministry said Monday.
In a report, the ministry said that by the end of January 2013, a total of 88 oil exploration and appraisal wells had been drilled in the country, with 76 of them encountering oil. The discoveries represent an impressive success rate of 85% with less than 40% of the oil region explored so far, as Uganda steps up efforts to join the ranks of top oil producers such as Nigeria, Angola and Sudan in Sub-Saharan Africa.
"Cumulative investments made in petroleum exploration in the country since 1998 are estimated to be $1.7 billion... this is expected to increase as the country enters the development and subsequently the production and refining phase of the petroleum value chain," said Kalisa Kabagambe, permanent secretary at the energy and minerals ministry.
Increased discoveries have upgraded the country's crude reserve estimates to 3.5 billion barrels from 2.5 billion barrels last year. However, government and oil companies are still split over the oil development plan and refining options, which continue to push back the planned start of production.
More than a year since Uganda approved U.K.-based Tullow Oil PLC's long-delayed $2.9 billion agreement to split its oil licenses with Total SA and CNOOC Ltd., an oil development plan is yet to be agreed for the basin.
Tullow, Total and CNOOC want to sell crude on the open market and are considering $5 billion of investment in crude pipelines to the East African coast. But Uganda insists that most of the oil should be refined locally, initially for domestic consumption and then for regional export. The three companies are planning to invest at least $12 billion to develop the oil fields.
Copyright (c) 2012 Dow Jones & Company, Inc.
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