Total, Tullow Granted Oil Production Licenses

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In short
Government finally grants production licenses to Total EP and UKs Tullow. Total and Tullow have been waiting for the licenses in order to announce investments toward oil production in Uganda.

Total E&P Uganda and Tullow Uganda Operations have received approvals for their Field Development Plans and have been granted Production License.

Five of the licenses were issued to Tullow Oil under Exploration Area Two (EA2), which covers the areas of Mputa-Nzizi-Waraga, Kasemene-Wahrindi, Kigogole-Ngara, Nsoga and Ngege, while three were granted to total under Exploration Area One (EA1) covering Ngiri, Jobi Rii, Gunya Fields, both in in the Albertine Graben. 

The licenses handed over by Energy Minister,  Irene Muloni flanked by her permanent Secretary, Dr Kabagambe Kalisa are valid for twenty five years but can be renewed for five years.

Tullow Uganda  and Total Exploration and Development are required to take investment decisions for the areas licensed eighteen months after receiving the license. The companies  are expected to invest over 8 billion US Dollars in the infrastructure required for oil production for all production licenses.

The investment will be for the drilling of about 500 wells, construction of central processing facilities and feeder pipelines, among others.

Muloni said it is time for serious work to begin. She urged Tullow Uganda and Total to fast track production of oil by 2020. She is optimistic that when production from all licensed areas starts, Uganda's oil output would be between 200,000-230,000 barrels a day.

The government has been shifting the dates for actual crude oil production as it engaged in negotiations with oil companies and other market players.

The shifting of the production date to 2020 seems in line with the planned completion of the Oil pipeline through Tanzania. Tanzanian Energy Ministry early this month indicated that it plans to complete the pipeline construction by 2020 at a cost of $3,5 billion.

Muloni reiterated government's commitment to plough oil revenues into other sectors so as to develop Uganda. She urged Ugandans, to get ready to partake in the participation of the industry.

The oil companies in a joint statement said the granting of Production Licenses now paves way for the Joint Venture Partners and other stakeholders to make considerations for long term capital and infrastructure investments in Uganda.

The statement said the Joint Venture Partners were grateful to the Government of Uganda for the approvals granted and that it will now enable them to  make a Final Investment Decision (FID) for the integrated Lake Albert project. They say the approval marks a major milestone towards the production of Uganda's oil resources.
 
The new licenses according to Total and Tullow  complements the production license issued to CNOOC Uganda Ltd as the operator of Exploration Area 3 (Kingfisher).

The granting of production licenses comes after Uganda and Tanzania agreed to construct and oil pipeline to transport crude oil from Kabaale in Hoima to Tanga port for export. 

The construction of the pipeline, with the capacity of transporting 200,000 barrels per day, is expected to  provide 1,500 direct jobs and 20,000 indirect jobs.

While some have criticized Uganda's decision to construct the pipeline through Tanzania as opposed to the Kenyan route, there reports that the government of Democratic Republic of Congo  is expressing interests to use the same pipeline to transport its crude oil.

A source at Energy Ministry in Kampala indicated that DRC Minister in Charge of Hydro-Carbons, Ngoi Mukena is already engaging authorities in Uganda and Tanzania expressing interest to join the pipeline project.

Some of the DRC's oil well are just on the boarder with Uganda.DRC expects to  transport 30,000 barrels per day at the start to 100,000 barrel per day.
 

 

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