Uganda Agrees Deal to Develop Oil Sector
KAMPALA — The government of Uganda has reached a deal with foreign oil companies to develop its oil sector, the country’s energy and minerals minister said Friday, ending a nearly three-year impasse and opening the way for a $15 billion investment.
The government has agreed the terms of a Memorandum of Understanding with U.K.’s Tullow Oil TLW.LN -1.01% PLC (TLW. LN), France’s Total SA FP.FR -0.18% (TOT) and China’s Cnooc Ltd. 0883.HK -0.63% (CEO) for the commercialization of the oil sector.
The plans consists of a 60,000 barrels-day refinery, a crude export pipeline to Kenya’s northern port of Lamu and a crude-fired electricity plant in Uganda’s oil region, Irene Muloni said in a statement obtained by The Wall Street Journal Friday.
The development paves way for a multibillion-dollar investment to develop the country’s oil fields, which are believed to contain up to 3.5 billion barrels of crude.
Uganda contains sub-Sahara Africa’s fourth-largest amount of oil reserves, behind South Sudan, Angola and Nigeria. “[The] Government, Tullow, Cnooc and Total have negotiated and agreed all the elements of a commercial framework,” Ms. Muloni said. “This is a significant milestone since the market framework is critical for the commitment of project financing.”
Tullow, Cnooc and France’s Total) are equal partners in a venture to develop all 20 fields, with each operating one of three blocks of the reserves.
Graham Martin, Tullow’s executive director said separately that Uganda is one of the countries at “the core” of the company’s exploration and production business strategy. “We expect production in Uganda to average 220,000 barrels a day, drawing from recoverable reserves of 1.7 billion barrels.”
– WALLSTREET JOURNAL