Uganda, Congo Border Spat Could Hurt Oil Exploration

KAMPALA, Uganda, May 30, 2007 (Dow Jones Newswires)

A border dispute between Congo and Uganda over the River Semuliki Valley could disrupt oil exploration activities in the Lake Albert Basin, a government official told Dow Jones Newswires Wednesday.

According to an official with Uganda's ministry of Energy and Minerals, Congo is claiming ownership of part of the valley following a shift in the direction of the River Semliki. Congo has claimed ownership of a swathe of land, saying the river forms a natural border between the two countries.

According to data from Uganda's Petroleum Exploration and Production Department, there are five exploration areas on the country's western border with Congo and within these areas there are six blocks, one of which is jointly owned by Heritage Oil Corp. (HOC.T) and Tullow Oil PLC (TQW.DB).

An official with Canada-based Heritage Oil told Dow Jones Newswires company activities haven't yet been hampered by the dispute.

Ugandan authorities have expressed concern over the development and are seeking to have the dispute resolved under the Great Lakes pack that was signed after the end of the 1998-2003 war. Semakula Kiwanuka, Uganda's minister in charge of investments, said the government would initiate talks with Congo to put in place mechanisms to sort out the dispute.

A Congolese diplomat in Kampala confirmed the dispute and said the relevant authorities are in talks with Uganda to resolve it.

Oil exploration activities in Uganda have been centered around the Lake Albert basin where since 2006 when Hardman Resources announced it had discovered significant commercial oil reserves. However, the exercise has met a number of impediments, including the infiltration of the exploration areas by Allied Democratic Forces rebels. The Uganda Peoples Defense Forces have deployed heavily in the areas.

According to the Ugandan Ministry of Energy and Minerals, exploration results in the country so far indicate the country's oil production capacity strands at 27,000 barrels a day, with 6% of exploration areas so far explored.

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