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Finally! Oil companies welcome production licenses

The Minister for Energy and Mineral Development, Irene Muloni, yesterday issued 8 production licenses to the Joint Venture oil companies.

According to Muloni, five of the production licenses have been issued to Tullow Operations Pty Ltd, over oil fields in the Exploration Area 2, while the three have been awarded to Total E&P Uganda BV for oil fields in the Exploration Area 1.

The development follows the conclusion of the evaluation of the applications for production licenses over those fields submitted by the respective companies to the Ministry. CNOOC Uganda Ltd already has a production licence for the Kingfisher oil field in Hoima.

The Exploration Areas where production licenses have been granted are jointly owned by the three joint venture partners – Tullow, Total and CNOOC. Tullow Uganda Operations Pty Ltd as the operator of Exploration Area 2 was granted production licenses for Mputa-Nzizi-Waraga, Kasemene-Wahrindi, Kigogole-Ngara, Nsoga and Ngege fields; while France’s Total was awarded production licenses for Ngiri,Jobi- Rii and Gunya in Exploration Area 1. Evaluation of two additional applications for production licenses over Mpyo and Jobi is ongoing.

In a joint press statement, the three joint venture oil companies applauded government. “The Joint Venture Partners are indeed grateful to the Government of Uganda for the approvals granted that will now enable us to proceed with activities required to make a Final Investment Decision (FID) for the integrated Lake Albert project. This approval marks a major milestone towards the production of Uganda’s oil resources,” the statement reads in part.

“It complements the production license issued to CNOOC Uganda Ltd as the operator of Exploration Area 3 (Kingfisher) and the important decision made to export crude oil to the international market through a 24 inch, 1443 km pipeline from Kabaale to Tanga port. The granting of Production Licenses now paves way for the Joint Venture Partners and other stakeholders to make considerations for significant long term capital and infrastructure investments in Uganda,” the statement reads.

The issuance of the production licenses puts on course the country’s hopes of having its ‘first oil’ by 2020/2021. Government is expected to issue more oil exploration licenses soon in the first competitive bidding. Government is already in negotiations with three oil companies for Production Sharing Agreements (PSAs) for four of the six oil blocks it advertised in early 2015.

Report by Edward Ssekika