Uganda launches second round of competitive bidding for oil blocks

Uganda has launched a second round of competitive bidding for five oil exploration blocks in the west of the country, where it has already discovered commercial crude reserves, the energy ministry said.

In a statement posted on its Facebook page, the ministry said a total of 4,928 square kilometres would be offered in the new round.

Energy Minister Irene Muloni, speaking at an oil conference in Kenya’s seaport town of Mombasa on Wednesday, invited investors to take up the blocks, the statement said.

She said many exploration companies were expected to show interest in the blocks, with the current relatively high price of crude oil making an investment attractive.

Uganda launched its first oil block auction in 2015, covering six exploration areas measuring 2,674 square kilometres. Prior to that, the country handed out blocks on a first-come, first-served basis.

Two of the firms that participated in the first round, Australia’s Armour Energy Limited, and Nigeria’s Oranto Petroleum, went on to sign production sharing agreements (PSAs) with the government.

The statement said the ministry would invite interested firms and consortia to submit applications within a period of 6 months after the announcement of the round.

“The licensing round is expected to be concluded with the award of Petroleum Exploration Licenses to successful firms by December 2020.” the statement said.

Uganda first discovered oil in 2006 in the Albertine rift basin which straddles its border with the Democratic Republic of Congo.

Government geologists have said crude reserves of 6 billion barrels have been confirmed with 1.4 billion barrels recoverable.

China’s CNOOC, France’s Total and the UK’s Tullow jointly own the existing fields but commercial production has been repeatedly delayed and is currently seen starting only in 2022.

Uganda, which is landlocked, has signed an agreement with Tanzania for a crude export pipeline which will terminate at Tanzania’s Indian Ocean seaport of Tanga. (Reporting by Elias Biryabarema; Editing by George Obulutsa and Kirsten Donovan)