Uganda fails to lure majors into oil industry

Last week, the ministry of Energy and Mineral Development released a list of 19 multinational companies that expressed interest in taking up licenses to explore for oil in the Albertine graben.

However, the list reveals one glaring reality: Uganda has failed to attract a major company into its oil industry. By most measures, all the companies that have expressed interest are what one would call junior firms, which are more willing to take risks with exploring for oil in wildcat wells. Many of the firms are from Nigeria, South Africa, United Arab Emirates (EAE), and USA.

Petroleum directorate officials had said global oil companies such as Exxon Mobil and Shell had shown interest in coming to Uganda, after it had been de-risked with success stories from companies such as Heritage Oil and Tullow Oil.

Releasing the list of companies on Wednesday, the permanent secretary in the ministry of Energy, Fred Kabagambe-Kaliisa, said the ministry had received a significant number of Applications for Qualification (AfQ).

He attributed the significant number of applications to the fact that the Albertine graben is Uganda’s most investigated, de-risked and prospective sedimentary basin with surface coverage in Uganda of approximately 23,000 sq km. So far, the country boasts of 6.5 billion barrels of oil in place and 500 billion standard cubic feet of gas in the Alertine graben. More than 60 per cent of the graben is not yet explored.

The country plans to issue exploration licenses in six blocks. Kaliisa noted that the interest from the 19 firms represents a significant milestone given the several challenges the entire oil and gas industry is going through. He further explained that the government will undertake the evaluation of the Application for Qualification until July 30, 2015. The qualified applicants will be displayed on August 10, 2015.

He further explained that government will issue a Request for Proposal/ bidding and the model Production Sharing Agreement documents to qualified applicants on August 20, 2015. The applicants will then bid for blocks or a block of their interest after the mandatory acquisition of data in the blocks or a block through the physical data room at the directorate of petroleum in Entebbe.

The best evaluated bidders will proceed to negotiate with government before signing Production Sharing Agreements with them.

“Government has planned to award new Petroleum Exploration, Development and Production licenses before the end of this year if all goes according to the planned licensing roadmap,” Kaliisa explained in a statement.

Transparency campaigners praised the release of the 19 multinational companies and the whole issue of how the next licensing round is being handled.

“This is a positive and transparent step, and a break from the secretive policies of the past,” said George Boden, a campaigner with the NGO Global Witness. The petroleum department will now need to vet each company in the frame carefully. They should of course ensure that they have the technical and financial expertise to do the job, but they also need to ascertain that they have strong environmental and social protection records and that they are free from conflicts of interest and previous corruption convictions. That’s what will give the Ugandan people confidence that their oil is being managed in their interest.”

The 19 companies
1 Rift Energy Corp from USA
2. Mubadala Petroleum of United Arab Emirates (UAE)
3. SASOL Exploration and Production International of South Africa
4. Oil and Natural Gas Corporation Videsh Limited (ONGC) of India
5. Petoil Limited from Turkey
6. Atlas Petroleum International Ltd, Nigeria
7. Oranto Petroleum International Ltd, Nigeria
8. Niger Delta Petroleum Resources, Nigeria
9. Africa Global Resources (Telconet Capital Ltd Partnership-Tatneft-Rostec) JV, Russia
10. Petrica Energy As from Norway
11. PTT Exploration and Production PCL from Thailand
12. Glint Energy LLC of USA
13. Rapid Africa Energy (Pty) Ltd of South Africa
14. Dragon Oil International Ltd of UAE
15. BRIGHTOIL Petroleum Uganda Ltd of Hong Kong/ China
16. WALTERSMITH  PETROMAN of Nigeria
17. ARMOUR ENERGY Ltd of Australia
18. Swala Energy Ltd of Australia
19. Tullow Uganda Operation Pty Ltd affiliated to Tullow Ireland

ssekika@observer.ug