Uganda expects billions of dollars in oil investments

Total said the door is now open for long-term capital commitments in the country.

By Daniel J. Graeber
Uganda expects billions of dollars in oil investments
Eng Irene Muloni signs petroleum production licenses for Tullow Oil and Total, which could invest billions of dollars in the country's emerging oil industry. Photo courtesy Uganda Ministry of Energy and Mineral Development/Facebook

KAMPALA, Uganda, Aug. 30 (UPI) -- The Ugandan government said Tuesday it awarded petroleum production licenses to companies expected to invest billions of dollars in oil development.

The government said five licenses were awarded to Africa-focused explorer Tullow Oil and three were awarded to the Ugandan subsidiary of French energy company Total.


"The companies are expected to invest over $8 billion in the infrastructure required for oil production for all production licenses," the country's Energy Ministry said in an emailed statement. "This investment will be for the drilling of about 500 wells, construction of central processing facilities and feeder pipelines, among others."

The government in 2014 unveiled plans to eventually build a new oil refinery that could produce as much as 60,000 barrels of oil per day. In April, Uganda said regional governments had embraced decisions to build pipelines from Uganda through Kenya and Tanzania to get crude oil to port facilities.

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For production, the government said Tullow and Total were expected to move quickly on production so that operations could start by the end of this decade.

For Total, the French supermajor said it was working through a joint venture that includes a Chinese partner to develop reserves in Uganda's Lake Albert region.


"The granting of production licenses now paves way for the joint venture partners and other stakeholders to make considerations for significant long-term capital and infrastructure investments in Uganda," the company said in an emailed statement.

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There was no statement offered by Tullow Oil. It said previously that it uncovered more than 1 billion barrels of oil in Uganda since operations began and most of that was in the country's Lake Albert basin.

The U.S. Energy Information Administration said Uganda holds an estimated 2.5 billion barrels of oil reserves. Kampala said it could recover about half of that, but if production isn't in full swing within the next few years, the Bank of Uganda warned there may be long-term problems for the nation's economy.

By the World Bank's estimate, Uganda will start pumping oil within two years, which could help the country transform its economy if revenues are managed appropriately.

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Uganda is categorized as a low-income nation with nearly 20 percent of the population living at or near the poverty level. The country's primary source of income pre-oil is agriculture.

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