(Adds details on blocks, oil price, background)
By Nicholas Bariyo
KAMPALA Uganda--Uganda has launched an oil-exploration licensing
round for six blocks in its Lake Albertine Rift basin, ending a
nine-year freeze on new licensing in its fast-growing energy
sector.
The blocks on offer include at least four lucrative discoveries
through an open competitive bidding process, Energy and Minerals
Minister Irene Muloni said on Tuesday, adding that new licenses
would be issued by the end of 2015.
"We have an estimated 6.5 billion barrels of oil in place from
exploration work in less than 40% of the Albertine Graben. However,
less than 10% of the Graben is currently licensed and the six
blocks targeted for this maiden licensing round have good data
coverage," Ms. Muloni added.
The blocks on offer cover a total of 2,982 square kilometers
along Uganda's western border, with the mineral-rich but restive
eastern Congo. Companies are expected to submit bids for the blocks
over the next three months and those with successful bids will
proceed to commence talks with government.
The development comes just a week after Uganda selected a unit
of Russian defense conglomerate Rostec to build a 60,000
barrels-a-day refinery, as the East African nation commercializes
its crude reserves, despite global crude prices dropping to
multi-year lows in recent months.
"Low prices will not stop us from continuing with our
preparations," Ms. Muloni told reporters in Kampala. "Oil prices
are usually cyclical, hopefully by the time we start production,
the trend will be upward."
Crude oil prices lost half of their value last year, weighed by
rising production amid concerns about the health of the global
economy. The price turmoil has raised concerns among investors
developing frontier projects in Africa. But analysts say there are
mounting signs that cheap oil is spurring demand, which could
support prices. Brent crude rose 1.5% to $59.80 a barrel on
London's ICE Futures exchange on Tuesday.
Uganda now has Sub-saharan Africa's third-largest reserves,
behind Nigeria and Angola, with 6.5 billion barrels of crude.
East Africa has been a focus for oil and gas exploration after a
flurry of discoveries in Uganda, Kenya and Tanzania in the past few
years. Analysts say the region could rival West Africa as the next
energy hub on the continent, given its close proximity to the
energy hungry Asian markets.
Current operators in Uganda include U.K.'s Tullow Oil PLC
(TLW.LN), China' Cnooc Ltd. (CEO) and France's Total SA (TOT).
Commercial oil production is expected to start in 2018.
Uganda had planned to start oil production around 2012, but a
string of disputes with oil companies, ranging from tax spats to
refining and export option issues, delayed the projects.
The country's Chamber of Mines and Petroleum, which represents
the companies, said the government's recent decisions would unleash
"serious" commercial activity.
"The industry has been bottled up for long, we cannot afford to
lose more time" said Elly Karuhanga, who heads the chamber. "Our
members are now very pleased with the of government's decisions,
this is very encouraging."
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
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