Tullow to Start Uganda Oil Devt Study Next Year

KAMPALA (Dow Jones Newswires), Sept. 21, 2009

Tullow Oil will start a comprehensive study on the properties of Ugandan oil next year in order to determine the best options to exploit it, Brian Glover, the business unit manager of Tullow's East African operations, said Monday.

The company will also look at taking on partners to help it develop the country's oil reserves, estimated so far at 2 billion barrels, he added.

Uganda's oil is very low in sulfur content, making it competitive in the world oil market, but it also has a high wax content, which means it solidifies if allowed to drop below 29 degrees Celsius and has to be heated to be transported in a pipeline.

Uganda's oil region is also remote, located at least 1,300 kilometers away from the nearest port, Mombassa in Kenya, so an oil export project would require a pipeline, as well as other support infrastructure like a rail line and roads.

Tullow is an "upstream company" that explores, develops and produces oil, so it will need a "downstream" partner to help it develop a refinery and a pipeline, Glover said.

"As we go into development and production, it's important we bring to the table partners that offer other areas of expertise," he said.

Company officials estimate Uganda's domestic oil consumption is 11,000 barrels a day, while the discovered oil reserves will enable the country to produce between 150,000 and 200,000 b/d for at least 20 to 25 years.  

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