Uganda’s oil reserves now estimated at 6.5 billion barrels

By Ronald Musoke

Uganda’s oil reserves have shot up by 87% from 3.5 billion barrels following recent appraisals of 14 oil wells done by the three oil companies currently involved in the country’s oil sector.

A senior energy ministry official said following the evaluation of more oil wells which encountered oil during the exploration phase, Uganda’s inventory now stands at 6.5 billion barrels.

However, the recoverable quantity—the oil which can actually be sucked out of the ground— has only improved marginally, from 1.2 billion barrels to 1.4 billion barrels.

Ernest Rubondo, the Commissioner for Petroleum Exploration and Production Department (PEPD) was on Aug. 27 speaking at an oil conference organized by the Konrad Adenauer Foundation and Leo Africa Forum.

Rubondo explained that in the past, calculating recoverable quantities has not been as accurate, since it has always been based on analogies from somewhere else in the world. However, he said, Uganda is now relying on its own data.

“So far appraisals of 14 oil fields have been concluded and the companies have submitted applications for production licences,” he said.

It is not so clear why the recoverable quantities have not able to improve as markedly as the reserve figures but Rubondo said Uganda is going to take a closer look at new technologies that would help Uganda recover as much oil as possible.

Asked about the sudden rise in the reserves, Rubondo told The Independent that some of the fields had been discovered to be broader, while more oil had also been encountered in additional layers of some of the fields during the appraisal.

He said he expects more production licences to be issued by the government before the end of 2014, adding that many infrastructural developments will take off from 2015.

A year ago, the government issued its first production licence to the Chinese firm, CNOOC, following a satisfactory review of the firm’s field development plan.

That licence was issued for the Kingfisher discovery— one of the first discoveries announced almost eight years ago in the mid-western district of Hoima.

The government is also in the final stages of reaching an agreement on the most suitable lead investor for its 60,000 barrels-of-oil refinery and related downstream infrastructure it is planning to set up in Hoima.

The two bidders currently undergoing review are SK Group (South Korean consortium) and RT Global Resources (Russian consortium).

The government is also in the final stages of compensating and resettling families from Kabaale in Buseruka Sub County (Hoima)—where a 29 sq km of land has been procured to set up an oil refinery.

At the conference, Rubondo was also quick to dismiss the perception that Uganda will only be an oil producing country for about 30 years, insisting that this timeline is only for the oil resources discovered in the 21 oil wells being appraised at the moment.

“There is a possibility of the country producing beyond the 30-year timeline,” he said.

Rubondo said he expects the moratorium which was slapped by the government in 2007 on licensing new exploration firms to be lifted by the end of this year. As a result, the next licensing round could happen as early as next year, he said.

He said the next licensing round will be competitive; it will be advertised, announcing potential areas since PEPD has up todate data of the Albertine Graben.

Up to 60% of the Albertine Graben is currently on hold and according to energy ministry sources, over 80 companies are waiting for the moratorium to be lifted.

“The process will be gradual and most likely it will go out for areas with enough data,” Rubondo added.

Rubondo insisted that the ministry would aspire to achieve the highest standards in the oil and gas aspects around the world, adding that the ministry will continue working with Norway, Malaysia, Trinidad & Tobago, Australia and Nigeria.

Meanwhile Emmanuel Katongole, the incoming chairman of Uganda’s National Oil Company (NOC) said he expects the NOC to be run as an enterprise that will return profit to Uganda and also change lives of Ugandans.

Katongole who is also the executive chairman at Cipla Quality Chemical Industries Limited, a Kampala-based ARV manufacturing plant, was however quick to add that that would only happen as long as Ugandans learn to do things differently.

“I don’t see why Uganda should not benefit [from her oil resources],” he said.

Katongole said Uganda’s oil cannot only be the business for the president or the NOC but it will be for all Ugandans and whoever messes it up should be taken to book.

“There is no reason as to why we should not make it work,” he said.