Uganda To Reach Full-Scale Oil Production In 5 Yrs

KAMPALA, Uganda, April 4, 2008 (Dow Jones Newswires)

Uganda expects to reach fully-fledged oil production in the next five years following impressive oil exploration results in the Lake Albert Valley, a senior government official told Dow Jones Newswires Friday.

Kalisa Kabagambe, the permanent secretary at the ministry of energy and minerals, said that Dublin-listed Tullow Oil is in the process of setting up a small oil refinery which will initially produce around 4,000 barrels of oil a day, part of which will be used to run a 50 megawatt thermal plant, as Uganda seeks to ease its power crisis.

Oil output is then expected to keep rising and reach full-scale in the next five years, he added. By that time, Uganda expects to produce between 40,000 and 60,000 barrels of oil a day.

Kabagambe said Uganda is in the process of constructing roads and railway networks to link the oil region to the rest of the country.

In February, Keith Myers, a U.K.-based analyst warned that the remote nature of Uganda's oil region and lack of infrastructure would hamper the early oil production scheme.

Uganda has already passed oil and gas policy which provides a regulatory framework for the exploitation of oil and gas resources.

Kabagambe said up to $5 billion is required to establish a Petroleum Authority of Uganda and a National Oil Company as the country prepares to join the league of oil-producing countries. Last year, Tullow Oil said it will have invested up to $300 million by the time it starts oil production in the middle of 2009.

KAMPALA, Uganda, April 4, 2008 (Dow Jones Newswires)