Uganda’s oil production target could more than double to 350,000 b/d by 2018 from the current target of 150,000 b/d in 2013 if the right business plan is adopted, according to Tullow Oil PLC.
“When the oil basin is in full production, we are probably talking about 350,000 b/d,” said Tullow Chief Executive Officer Aidan Heavey, adding that the firm plans to begin producing crude oil this year, with initial production of 1,000 b/d.
A barrel of crude oil is equal to about 160 litres. To compare, Ugandans today consume 2 million litres of fuel daily; 1.2 million litres of diesel, 600,000 litres of petrol and 200,000 litres of kerosene per day.
Heavey said output will rise to 10,000 b/d in 2011 and to 150,000 in 2013. The 150,000 bbl-target for 2013 is based on current proven reserves of 700 million boe. But there is upside in the basin as proved, probable, and possible reserves are estimated to total 1.5-2 billion boe.
Tullow owns 100% of Block 2 and is awaiting approval from the Ugandan government to purchase the remaining 50% stakes in Blocks 1 and 3A from Heritage Oil, giving it full ownership over the three blocks in Uganda’s Albertine Rift basin.
Tullow is talking to Total SA and China National Offshore Oil Corp. (CNOOC) about selling them a 50% stake in the licenses and jointly managing development of the Lake Albert’s oil resources. Tullow also expects the partner to help with the construction of a refinery and export pipeline.
“The investment is going to be huge. You are talking about multiple billions of dollars of investments. The only two companies that are currently in the final process are CNOOC and Total,” Heavey said, adding, “It would be good if both were involved.”
However, Tullow’s proposed farm-in may deviate from that plan as the Ugandan government has asked the Irish firm to reduce the size of its proposed share from 50% to 33% in two of the blocks and to allow CNOOC and Total each to operate one block.
“In recognizing the need to avoid a monopoly, Tullow has presented their plan to partner with both Total and CNOOC,” said Kalisa Kabagambe, the energy ministry’s permanent secretary.
“However, government has asked Tullow to reconsider its proposal of operating two out of three exploration areas and instead let each partner operate an exploration area,” Kabagambe said.
The Ugandan government is still considering the development plans presented by Total and CNOOC, after which a final decision will be made on Tullow’s acquisition of the Heritage stake””probably by the end of March.
“The farming-in partners, CNOOC and Total, have been invited to present their plans for development of the oil sector to the government,” Kabagambe said.
“The approval for the partners to join the licenses shall be made only upon confirmation that the partnership addresses the country’s interests,” Kabagambe said.
Kabagambe said Uganda required significant investment of $8 billion over the next 10 years to develop the oil and gas industry, and he also called for the creation of a national oil company.
“The government should form an oil company to increase national participation, especially in commercial aspects of the oil and gas sector,” Kabagambe said.