Unlikely Oil Region Searches For New Investors

Uganda is currently pitching its vast and underdeveloped oil resources to investors at roadshows around the world, Uganda’s Energy Minister Irene Muloni told Bloomberg Television in an interview in Dubai on Tuesday.

Uganda is one of the hot spots for oil development in sub-Saharan Africa. A newcomer on the oil scene, the landlocked country has so far welcomed Tullow Oil, CNOOC, and Total in its oil-rich regions.  

Uganda has announced a second bidding round to be held next year, offering five oil blocks from which it expects production to begin by 2023.

“There is a lot of money that needs to be sunk into exploration and development before you go into production,” Muloni told Bloomberg, adding: “We hope by the end of next year, we will have new investors for these five blocks.”

So far, CNOOC, Tullow Oil, and Total have invested in the African country a total of US$3 billion, Muloni said.

A total of 6 billion barrels of oil reserves in place have been discovered in Uganda, of which some 1.4 billion barrels are recoverable resources, the energy minister noted. 

Landlocked Uganda, however, needs to build first a long oil pipeline to the Tanzanian coast in order to export the oil that it will pump.

According to Muloni, Uganda will aim to have a 15-percent stake in the planned pipeline, Tanzania could also have a stake, Tullow Oil is weighing the possibility of a 10 percent stake, and CNOOC and Total will likely share the remainder.

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Last month, reports had it that all activities on the oil pipeline planned to export crude from Uganda had been suspended, following the collapse of a stake acquisition deal in a key Ugandan oil project.

The East-African Crude Oil Pipeline (EACOP) is planned to be a 1,443-kilometer-long (897 miles) pipeline worth US$3.5 billion and expected to transport oil from Uganda to the Tanga port in Tanzania.

But Tullow Oil said at the end of August that its agreement to sell part of its stake in the Lake Albert project to Total and CNOOC had been terminated because “the Ugandan Revenue Authority and the Joint Venture Partners could not agree on the availability of tax relief for the consideration to be paid by Total and CNOOC as buyers.”  

By Tsvetana Paraskova for Oilprice.com

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