Uganda Ministry of Energy and Mineral Development issued eight oil production licences to lead oil industry players Tullow and Total, ending years of deadlock.
The two now join their Chinese partner China National Offshore Oil Company (CNOOC) which received its production licence in September 2013.
The Licences are for Exploration Area 1 (EA1) and Exploration Area 2 (EA2) in Uganda’s oil-rich Albertine Basin.
“Five production Licences have been granted to Tullow Uganda Operations Pty Limited (Tullow) the operator of EA2, and three production Licences have been granted to Total E&P Uganda BV (Total) for the operator of EA1” reads a statement in Party.
The Licences demand that Oil companies invest over $8 billion in infrastructure required for oil production. The lead infrastructure according to a ministerial statement include drilling about 500 wells, construction of processing facilities and feeder pipelines among others.
Production licences issued have a duration of 25 years and can be renewed for an additional five years as provided for in the production Sharing Agreement (PSA). Oil PSAs are still classified.
Uganda says final investment decision on the fields by the operator is expected 18 months after the issuance of the production licences and first oil is expected in 2020.
While awarding the licences in Kampala, Energy Minister Irene Muloni re echoed the need to fast track the production which she says is expected to start by 2020.
However, Uganda oil production is entirely dependent on its export infrastructure and in this case an export pipeline.
In April, Uganda agreed with Tanzania to jointly develop a pipeline from the albertine to Tanzania’s Northeastern Port of Tanga. Ministerial committees from both countries said they are working to see the project complete in less than three years.
The ministry said the issuance of the licences follows a conclusion of evaluation application for production of the above wells and are also in line with section 69-74 of the Petroleum (Exploration and Production) Act of 2013.