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Gov’t to generate UGX 18bn from new oil licensing round

FILE PHOTO: Oil exploration

Kampala, Uganda | THE INDEPENDENT | Government has said the second round of oil licensing will generate more than 18 billion shillings for Uganda.

Government recently unveiled five target areas in the Albertine Graben for the second licensing blocks. They include; Avivi, which covers the districts of Obongi, Adjumani, Amuru and part of Arua, Omuka, which covers Nebbi, Nwoya and Buliisa, and Kasuruban which covers the districts of Buliisa, Hoima and Masindi.

Others are Turaco covering the districts of Ntoroko and Ngaji covering the districts of Kanungu, Rukungiri and Rubirizi.

According to Government, the Second Licensing round is meant to establish additional petroleum resources and reserves to the current resource of 6.0 Billion Barrels of oil and recoverable reserve of 1.4 Billion barrels of oil in the country.

Simon D’Ujanga, the Minister of State for Energy says that the licensing round is expected to lead to enormous benefits including upfront direct monetary revenue from application fees, data package sales, signature bonuses, training fees and ground rent to the tune of more than USD 5 million.

D’Ujanga was on Thursday presenting a report on the areas open for competitive bidding for petroleum exploration licenses in respect of the second licensing round to Parliament.

Government is soon opening up a new round for competitive bidding for the new exploration phase.

He, however, says that in order to efficiently and effectively implement the licensing round, they will use 3.52 billion shillings for the financial year 2018/2019 and 2019/2020.

D’Ujanga says other economic benefits will accrue upon oil and gas production in the demarcated blocks in case of commercial discoveries.

“Technical and financial benefit analysis indicates positive Net Present Value, and Government Take in excess of 80% for projects in all the blocks, with total future revenue due to government estimated at about US 44 billion,” D’Ujanga told.

According to D’Ujanga, Uganda will benefit greatly from local content.

“The local content benefits that shall include investment retained in the country from use of local goods and services, and employment of Ugandans.”

He says for example, during the exploration stage in 2013 Tullow Oil Ltd employed a total of 203 people out of which 80% were Ugandans, CNOOC employed about 115 people out of which 70% were are Ugandans &Total employed over 500 people out of which 80% were Ugandans.

“It is therefore expected that the new exploration licenses will present significant employment and provision of goods and services opportunities to Ugandans.”

For the second round, the companies participating in oil exploration are Tullow, Total and CNOOC. Uganda expects to start commercial oil production in 2023.

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