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First competitive licensing round soon

Government is continuing to make preparations for the first competitive licensing round for acreage in the country’s oil-rich Albertine Graben.

State Minister for Energy, Simon D’ujanga, told Parliament this week that Cabinet approved the plans two weeks ago after which a report was submitted  to the House as required by the Petroleum Exploration, Development and Production Act 2013.   The announcement inviting Companies to participate in the licensing round is yet to be made.

The areas planned for this licensing round include parts of the Semiliki and Kanywataba blocks in Ntoroko District, Ngassa block in Hoima district, Taitai and Karuka block in Buliisa district, Mvule block in Yumbe and Moyo districts and Ngaji block in Kanungu and Rukungiri districts.

According to the Petroleum Exploration and Production Department’s Honey Malinga, most of these were previously licensed exploration areas which were subsequently relinquished.

“The areas that are planned for licensing have good data coverage. When oil companies acquire rights over an area, they do so for a given period of time and spud specific wells. The exploration licenses have expiry dates and so when the time is nigh, we request you to return the areas to government,” he explained.

Most of the acreage up for grabs comprises of areas where previous exploration efforts have been undertaken.

The Kanywataba prospect area reverted to government in 2012 after the area operator CNOOC hit a dry well. Ngassa discovery was also reclaimed by government last year after Tullow’s exploration license expired having sunk two wells which encountered oil and gas respectively. In the Mvule prospect Area, Tower Resources Plc’s license expired after drilling one dry well in 2012. Dominion didn’t encounter oil in the Ngaji prospect area in 2010 after drilling one well. All these areas have seismic data acquired by previous licensees.

This is the first time Uganda is opening up exploration areas to bidders through open competitive bidding as required by the Petroleum (Exploration, Development and Production) Act, 2013. Earlier licenses were granted through negotiations and government licensed explorers on the basis of first-come, first-serve. No commercial discoveries of petroleum had been made in the Albertine Graben then and the area was considered highly risky by the international oil industry and therefore less attractive.

There have been reports from government sources that this licensing round, which has been delayed since early last year, will attract big players in the industry given the impressive success rates registered by current explorers in the country. Mozambique, Tanzania and Angola together with UK, India and Norway have recently held licensing rounds.

Report by Flavia Nalubega