Confirmed oil deposits in Uganda have gone up 40% in the last year but industry experts and investors are wary of the slow pace of the transition to the production phase.
A top Energy ministry official says following a recent appraisal of three oil wells; Gunya, Mpyo, and Jobi East, in Exploration Areas 1 &2 (north of Lake Albert area), Uganda’s oil inventory now stands at 3.5 billion barrels, a 40% increase, that is expected to rise ever farther.
“If we are extremely lucky, we could move to eight or ten billion barrels of oil soon,” says Ernest Rubondo, the Commissioner at the ministry of Energy’s petroleum exploration and production department.
He was on Sept. 13 speaking at a conference on oil organized by the Konrad Adenauer Foundation and the Uganda National Chamber of Commerce and Industry in Kampala. He said 77 oil wells have been drilled to-date with 70 encountering oil and gas.
“This represents a 90 percent drilling success rate,” Rubondo said. The world average stands at 10 percent.
He said the US$1.5 billion so far invested in Uganda’s oil and gas exploration represents about one dollar per barrel which is far cheaper compared to the world average of US$5-10 of investment per barrel. The 3.5 billion barrels so far appraised is from 40% of the Albertine Graben area with great potential for more hydrocarbons.
But the President and Director of Tullow Oil Uganda, Elly Karuhanga, is not happy about the stagnation that has engulfed the country’s oil and gas sector over the last six years.
Karuhanga said he gets pained when he knows Uganda should be the hub of oil and gas in the eastern Africa region by now yet nothing seems to be moving in the right direction.
“What are the things that are delaying Uganda moving onto the next level? We should remember capital is a coward. Capital goes where capital grows. These delays are unfortunate.”
“I get pained when things do not seem to be moving. These laws were first presented two years ago but they are yet to be passed,” he said, referring to two Bills; The Exploration, Development and Production Bill 2012, and The Refining, Gas Conversion, Transportation and Storage Bill 2012 that were presented before Parliament on Sept 11.
“There is a lot of unhappiness from the oil companies and service industries because so many are running bankrupt. So many borrowed on the back of early oil production,”Karuhanga said.
The Director of the Department of Economic Development, Energy, Governance and Gender of the Norwegian Agency for Development Cooperation, Dr. Petter Nore, who spoke on the Norwegian experiences with oil and gas over the last 100 years advised Uganda to quit talking at some point and start acting because Uganda is now surrounded by other countries that are discovering oil and gas at a faster rate.
Uganda’s oil development has stagnated over the government failure to issue production licences.
According to Rubondo, the government is acting with caution because it wants to ensure that “the field development plans are developed optimally.
He said although licensing the remaining 60% of the Albertine Graben is currently on hold, over 80 companies are waiting for the licences.