Government is today expected to formally publish an advert calling for bids from companies that are interested in exploring for oil as the new round of licensing gets underway.
The firms whose bids are successful will be issued with a detailed request for bids together with the Modal Production Sharing Agreement (PSA) for the specific blocks.
Companies submitting the best evaluated bid for each of the blocks will proceed to negotiations with government prior to signing production sharing agreements. The licensing round is expected to conclude with the award of licenses by the end of 2015.
The successful companies will then try to strike oil where a number of firms failed as the six oil blocks on offer did not garner much success earlier.
Irene Muloni, the minister of Energy and Mineral Development, named the six blocks as: Ngassa (410km2) in Hoima district, Taitai and Karuka (565km2) in Buliisa district, Ngaji (895 km2), Rukungiri and Kanungu districts, Mvule (344km2) in Moyo and Yumbe districts together with Turaco (425 km2) and Kanywantaba (344km2) in Ntoroko district.
“These blocks have both seismic and well data which were acquired by oil companies previously licensed in these areas,” she said.
Uganda has an estimated 6.5 billion barrels of crude oil in place from exploration work in less than 40 per cent in the Albertine graben. Muloni said “the six blocks targeted for this maiden licensing round have good data coverage.”
Muloni said government had undertaken resource and risk assessment of the areas, developed a data room, and made available data packages to prospective investors.
Uganda’s first licensing round is guided by the National Oil and Gas Policy for Uganda (2008) and the Petroleum (Exploration, Development and Production) Act 2013.
Muloni said: “In line with the guiding principles of our National Oil and Gas Policy, we are committed to a transparent process developing Uganda’s oil and gas sector. That is why we have not licensed any new acreage for exploration since 2007. This was to enable us to put in place the required legal, regulatory and institutional framework to ensure an open, efficient and competitive licensing process.”
Global Witness, an international campaign group, is concerned that government has opened up new areas for exploration without the two key institutions responsible for managing the sector: the Petroleum Authority and the National Oil Company. However, Muloni said “within two months from now, we shall have the authority in place.”
George Boden of Global Witness advised Ugandans to take note of the companies that are licensed.
“The government should carefully select companies based on their previous track record. Those with a history of corruption, criminality, human rights violations or weak environmental protection should be excluded from the bidding,” he said.
Boden called on Uganda’s government to also publish details of everyone behind the bids, including the ultimate owners of companies, so that “it is clear who will profit from future deals.”
The ministry will make available more detailed information on the blocks during the upcoming seventh East African Petroleum Conference and Exhibition, which will be held in Kigali, Rwanda from March 4 to 6, 2015.
Currently, three international oil companies, Tullow Uganda Operations Pty Limited, Total E&P Uganda and China National Offshore Oil Corporation (Cnooc) Uganda Limited are licensed in Uganda’s Albertine graben.