Uganda: Close to Drilling Deal with International Oil Companies

KAMPALA, Uganda - Uganda is close to an agreement over oil drilling in the Lake Albertine Rift basin, its president said late on Tuesday.

"We are now about to conclude an oil-and-gas extraction plan that will be equitable to Uganda and the oil companies," a presidential spokeswoman quoted President Yoweri Museveni as saying.

"Uganda discovered oil in 2006 but has not been able to start the extraction process owing to a battle...with oil companies."

Uganda has an estimated 3.5 billion barrels in reserves which could see it join Nigeria, Angola and Sudan as a big, sub-Saharan producers.

The government has denied drilling licences unless oil companies agree to build a refinery and process most of the crude in Uganda. The companies are demanding a pipeline be built to the east African coast.

Oil projects worth as much as $12 billion are on hold since the impasse started more than a year ago.

Total S.A. said executives met Mr. Museveni last month but added that it won't start work on its concessions until the pipeline is approved.

Other companies ready to start production in Uganda are Tullow Oil PLC and Cnooc Ltd.

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


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