Baz Waiswa

Baz Waiswa

Here Are PSA Conditions Under Which Armour Energy Will Operate In Uganda

In what looks like a snippet of what is contained in the highly guarded Production Sharing Agreement (PSA) signed between Uganda and Australian oil and gas exploration firm Armour Energy Limited (AEL), the government has lined out economically stringent conditions under which the explorers will operate.

The Ministry of Energy and Mineral Development Thursday granted a License for Petroleum Exploration, Development and Production over the Kanywataba Contract Area found in Ntoroko district, western Uganda, culminating into the signing of the PSA, the first in line with Section 58 of the Petroleum Exploration, Development and Production Act 2013.

Armour Energy will join UK based Tullow Oil, France’s Total E&P and Chinese CNOOC in trying to produce Uganda’s oil estimated to be 6.5 billion barrels buried in the Albertine Graben in Western Uganda. However it will have to deal with the following terms and conditions as outlined by Irene Muloni, the energy and mineral development minister.

  • Armour Energy gets an exploration license with acreage of 344 sq. Kilometer for four years split into two periods of two years each.
  • A minimum work programme which includes acquisition of seismic data and drilling of at least one well.
  • An Advisory Committee chaired by the Petroleum Authority of Uganda, and consisting of representatives from Government and the Licensee to review and approve all annual exploration work programmes, budgets and production forecasts.
  • Payment of Royalty based on the Gross Total Daily Production in Barrels of Oil Per Day (BOPD). The rate of royalty ranges from 8.5% to 21%.
  • State Participation by Government or its Nominee at not more than 20%. 6. Cost Recovery limit for Petroleum is set at 65%.
  • Production Sharing.
  • A Signature Bonus together with Research and Training fees, and Annual Acreage Rental fees for the First Exploration Period amounting to US$ 316,000 have been paid to the Uganda Petroleum Fund.
  • A Performance (Bank) Guarantee amounting to 50% of the Minimum Exploration Expenditure for the First Exploration Period.
  • Taxes will be paid in accordance with the Laws of Uganda.
  • A requirement to train and employ suitably qualified Ugandan citizens has been provided for in addition to payment of annual training fees to Government.

The signing of the PSA for the Kanywataba Block between the government of Uganda and Armour Energy Limited marks the successful conclusion of Uganda’s first competitive licensing round for the oil and gas sector, the minister said at the signing ceremony in Kampala.

Government in February of 2015 implemented the first competitive licensing round as required by the Petroleum (Exploration, Development and Production) Act, 2013 to attract additional investment in the country’s oil and gas sector, expand the country’s resource base which stands currently at 6.5 Billion barrels oil in place and thus increase the revenue base and enhance the country’s sustainability of oil and gas production.

After Armour Energy, the minister said more companies are going to be announced in the near future after cabinet on Friday 8th September 2017, approved the award of two licenses in the Ngassa block.

Uganda Earned $2.4m From Sale Of Data To Bidders

The acting permanent secretary in the ministry of energy and mineral development Mr. Robert Kasande has revealed that government of Uganda made a whopping $2.4m from the sale of data to bidder after it announced the first licensing round in 2015.

 Kasande added that one of the major achievements from this licensing round was the development of a state of the art data room which remains open to the industry to view and purchase data, and will also be used for future licensing rounds.

He made the revelation during the signing Ceremony of the Production Sharing Agreement (PSA) between Government of Uganda (GOU) and Armour Energy Limited for the Kanywataba block on Thursday at the ministry head office in Kampala.

Government in February of 2015 implemented the first competitive licensing round as required by the Petroleum (Exploration, Development and Production) Act, 2013 to attract additional investment in the country’s oil and gas sector, expand the country’s resource base which stands currently at 6.5 Billion barrels oil in place and thus increase the revenue base and enhance the country’s sustainability of oil and gas production.

“Given that this was the First Competitive Licensing Round for the country, we undertook a comprehensive process of approval of the blocks for licensing as required by the Petroleum (Exploration, Development and Production) Act, 2013,”

“The selection of the blocks was based on availability of data and prospectivity. This licensing round covered six blocks with a total acreage of 2,674 Km2 in the Albertine Graben which is Uganda’s most prospective sedimentary basin,”

“Following the selection of the blocks, we undertook national and international promotional efforts, developed the required bidding documents including the model Production Sharing Agreements, packaged the technical data and developed a data room; and later negotiated with the successful bidders,”

Nineteen potential bidders responded and picked the Request for Qualification, Kasande said, adding that out of the nineteen applicants, seventeen submitted Application for Qualification (AfQ) by the deadline day.

He explained that government evaluated the submissions and recommended sixteen companies to proceed to the Request for Proposal stage (RfP). The Request for Proposal together with the Model PSA were issued to the sixteen qualified applicants on 1st October 2015.

The RFP required the applicants to carry out a number of activities that included visitation of the data room, attend a Bidders’ conference and field visits among others. The purpose of these activities was to ensure that all companies participating in this licensing round were given as much information as possible to enable them prepare responsive bids.

Four bidders from the seven companies which had submitted proposals by the deadline date of 26th February 2016 emerged successful and were selected for negotiations.  The four bidders that were selected for the negotiations were Waltersmith Petroman Limited, Oranto Petroleum Limited, Armour Energy Limited and Niger Delta Petroleum Resources Limited.

Armour Energy Limited now has a exploration license and has signed a PSA with government. The energy minister Irene Muloni has said more companies are coming on body because cabinet gave them the green lights for the award of two licenses in the Ngassa block. Armour Energy and those to be announced will join Tullo Oil, CNOOC and Total E&P in the pursuit of Uganda’s oil.

 This first licensing round was undertaken in line with the National Oil and Gas Policy for Uganda (2008) and in accordance with the Petroleum (Exploration, Development and Production) Act 2013.

Uganda’s first licensing round covered six blocks with a total acreage of 2,674 Km2 in the Albertine Graben, Uganda’s most prospective sedimentary basin.

Uganda Offers Oil And Gas Exploration License To Australian Firm

The Minister for Energy and Mineral Development in Uganda, Irene Muloni, will this week on Thursday ‘grant a Petroleum Exploration License and Sign the Production Sharing Agreement for the Kanywataba Block with Armour Energy Limited’, an email from the ministry’s senior communications officer Gloria Sebikari inviting Earthfinds to attend the ceremony has revealed.

According to information on their website, Armour Energy is a leading natural gas, natural gas liquids and crude oil producer in Australia with expertise in exploring for and developing conventional gas, tight gas, shale gas and both conventional-unconventional oil resources.

In 2015, the energy ministry announced its first competitive bidding round for six exploration blocks, covering a total of 3,000 square kilometres (1,150 square miles).

After receiving and reviewing submitted bids by over 17 companies, the ministry last year announced that Nigerian firms WalterSmithPetroman Oil Limited, Oranto Petroleum International, Niger Delta Petroleum Resources and Australia’s Armour Energy Limited had been considered.

In June this year the ministry recalled a media invitation to an event at which exploration licenses for Ngassa Shallow Play and Ngassa Deep Play Contract areas were going to be issued to Oranto Petroleum International Limited. It didn’t give any reason for the cancellation of the issuance.

Now Armour Energy joins UK’s Tullow Oil, Chinese CNOOC and France’s Total E&P who recently received production licenses after their field development plans were accepted by government and are now working on ensuring that Uganda starts producing oil in 2020.

Ghanaian Cultural Leader Criticizes Lack Of Transparency In Africa’s Extractives Industry

There are no transparent fiscal regimes in Africa governing oil, gas and mining in Africa, an unfortunate trend on the continent which has condemned indigenous people at the hands of foreign investors who come to take away the continent’s natural resources, a cultural leader told a meeting in Accra, Ghana.

This was said by the Paramount Chief of Western Nzema Traditional Area, Nana Awulae Annor Adjaye, during the opening session of this year’s Summer School on Oil, Gas and Mining Governance (Anglophone Africa Regional Extractives Industries Knowledge Hub), organized by Natural Resource Governance Institute (NRGI) in Accra, Ghana.

The Summer School has attracted about 45 participants from Kenya, Uganda, Tanzania, Mozambique, Malawi, South Africa, Ghana, Nigeria, Sierra Leone, Zimbabwe, Cameroun and Botswana. Participants are mainly from civil society, media, academia and government bodies.  

While what the cultural leader raises is not a new issue, it points to a continent doing everything wrongly as it extracts and depletes its natural resources while indigenous people are subjected to utter poverty, one meal a day, dropping out of school and loss of land. This comes about because government and companies mismanage revenues generated and indigenous people don’t benefit directly or indirectly.

The Paramount Chief described as ‘nonsense’ rhetoric efforts to promote good governance and democracy because they were introduced by the same people (colonialists) who have returned to ‘steal your wealth’. He said it was ‘disheartening’ to see that Africa has resources but ‘you don’t know where the money from these resources go’.

He said that 80% of land in Ghana belongs to chiefs ‘but you wonder what is happening to the owners of the land’. “Our people have remained poor, some eat once a day and children are dropping out schools,” he stated, pointing fingers to governments, CSOs and other people facilitating the return of colonialists who plundered Africa in the past.

“People in the extractive industry are not from Africa, they have come back to steal your wealth,” he alleged, adding that Africa received political but not economic independence because people who partitioned Africa had an agenda. An agenda they are pursuing now by hunting down the continent’s oil, gas and minerals.

The Paramount Chief faults the failure to implement the right laws to track revenues, mitigate environment issues because countries have structures that work. Some of these governments lack the expertise to negotiate contracts with the moneyed oil companies.

“We have closed our eyes, we don’t talk, and when we talk we don’t walk the talk,” he said before encouraging participants at the Summer School to ensure their countries have sustainable livelihoods.”If you don’t do that you are wasting our time,” he sounded.

Emmanuel Kuyole, a consultant working with NRGI explained that to successfully manage natural resources there must be rules, institutions who obey rules and citizens who understand and obey rules. He advised that while deciding to extract natural resources, countries must prepare, build capacity and get the right information.

 Organizations like NRGI are building capacity among members of the civil society organizations, the media and academia who play an oversight role in keeping government and oil companies in check. While they have the capacity, they can help address the Paramount Chief fears and contribute to having health natural resources extraction.


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