KAMPALA – The government has permitted state-owned Uganda National Oil Company – UNOC to start oil exploration in the Kasurubani area – Minister Ruth Nankabirwa confirmed.
This follows the issuing of a petroleum exploration licence and the signing of a production sharing agreement between government and the oil company.
A production sharing agreement manages the relationship between a licensee, or the Exploration Company and government. It spells out how oil benefits such as royalties, cost and profit oil will be shared in percentage terms once a discovery is made.
UNOC’s principal shareholders including; the Ministry of Finance and Ministry of Energy witnessed the signing of the agreement on February 4, at the Ministry of Energy headquarters led by Minister Nankabirwa.
“The additional resources are to ensure sustainability of oil production and economic viability of the refinery and the East African Crude Oil Pipeline – EACOP,” said the Minister.
Bright Irumba Clovice – in the acting capacity for the Petroleum Authority, said the new exploration activity will not only increase on the experience of Ugandans, and UNOC in the exploration field, but also on national content participation at the most strategic level.
The exploration area covers over 1,285 kilometres across the districts of Masindi, Hoima and Buliisa.
The permission comes after issuing a petroleum exploration licence and signing of a production-sharing agreement between the government and UNOC.
Energy Minister Ruth Nankabirwa said that UNOC will be a new entrant to contribute to the current resource of six billion barrels of oil and a recoverable reserve of 1.4 billion barrels of oil.
Cabinet in last month’s meeting, approved the signing of Production Sharing Agreements and grant Exploration licences for an initial two-year period to UNOC for the Kasurubani block. This also included DGR Energy Turaco Uganda SMC Limited for the Turaco Licence.
UNOC and DGR-Global – the two successful companies from the Second Licensing Round commenced in May 2019.
Six oil companies applied for prequalification for the five blocks on offer, and four were shortlisted.
The Energy Ministry also plans to announce a third licensing round during the East African Petroleum Conference and Exhibition, scheduled to take place in May 2023 in Kampala.
Nankabirwa said plans were underway to announce a third licencing round during the East African Petroleum Conference and Exhibition scheduled for May 2023.
