Uganda Halts Oil Exploration Licenses as New Policy Awaits OK

KAMPALA, Uganda, (Dow Jones Newswires), Aug 06, 2007 (Dow Jones Commodities News)

The Ugandan government will not issue licenses to oil exploration companies until it finalizes a new oil and gas policy, the ministry of energy and minerals said Monday.

The final draft is almost complete and will be tabled in parliament for approval by the end of this month, according to a ministerial statement.

Last month, the Ugandan government entered into a Production Sharing Agreement for Exploration of Block 4B, with Dominion Petroleum, an official at the energy and minerals ministry said.

No more companies will be licensed to carry out exploration.

The policy, which will provide guidance on mineral exploration and exploitation, aims to make good use of oil revenues when oil production starts in 2009.

Up to 30 companies have applied for exploration licenses since last year, the government said.

Companies that already have oil and gas exploration licenses in Uganda include Dublin-listed Tullow Oil (TQW.DB), Canada-based Heritage Oil Corp.(HOC.T) and London-based Tower Resources PLC (TRP) .

The discovery of commercial oil reserves in the Lake Albert areas last year, has spurred Ugandan Oil exploration activities. However, it has also sparked a number of conflicts, the latest being a border dispute between Uganda and Congo which has intensified last week when, according to Ugandan local media, Congolese authorities accused oil exploration companies in Uganda and the Ugandan army of incursions into its territory on Lake Albert.

Congo and Ugandan military officials are meeting Monday in western Uganda where four Ugandan soldiers detained by Congo are expected to be handed over.

Armies of both countries have been dispatched to the region over the weekend.

Daudi Migereko, Uganda's minister of energy and minerals, said the discovery of oil in the Lake Albert Basin is not expected to cause conflicts between Congo and Uganda because the two signed a Resource Agreement in 1990 which spells out how to deal with resources that fall between the two countries.

Copyright (c) 2007 Dow Jones & Company, Inc.