Uganda's First Oil Production Now Pushed To 2022

The ever-shifting date for Uganda's first oil is now 2022, and not 2020, according to Energy minister Irene Muloni. Addressing journalists in Kampala, Muloni attributed the shift to the delay by the joint venture partners Total, China National Offshore Oil Company (CNOOC) and Tullow to make an investment decision to develop the oil fields in Tilenga and Kingfisher blocks.

Minister Muloni said with Tullow selling its stakes to Total and CNOOC, and with the deal still delaying, the final investment decision has also been delayed. Muloni says they now estimate that the final investment decision will be made in the first quarter of 2019, adding that as a consequence the first oil is now expected in 2022.

Tullow, Total and CNOOC hold equal stakes of 33.3 per cent in the Lake Albert Basin project covering three blocks - namely Block One, Block Two and Kingfisher. It is not yet clear how much Tullow will earn from the sale of the shareholding, whether it is selling all of its stakes, and when the final deal will be sealed.

Compared to Total and CNOOC, Tullow is a small oil company that risked it all to make the first oil discoveries of commercial quantities. The farm down talks have been going on for much of this year and its delay has affected the final investment decision to develop the oil fields in Blocks One and Two. 

This would be the third time Tullow is selling off its stakes to Total and CNOOC. In 2012 it sold 66.66 per cent of its stakes, remaining with 33.33 per cent stake in Block Two. 

In January 2017, Tullow again sold 21.5 percent of its stakes in Block Two to the same joint venture partners. It is said the delay in the farm down has affected the timeline for both CNOOC and Total to make final investment decisions key for kick-starting major developments in the basin. 

Uganda has so far made 21 oil field discoveries with the joint venture partners granted production licenses for 14 fields. Muloni says the delay in the final investment decision also affects final investment decisions for the refinery and the crude oil pipeline. 

According to Muloni, the oil refinery is now expected to come on line in 2023. First oil refers to that very first barrel of crude oil that signals the start of oil production. Commercial oil in Uganda was discovered in commercial quantities in Uganda in 2006 and since then the timeline for Uganda's first oil has been shifting.

The first target was 2013, then 2015/16, then 2018, then 2020 and now 2022. The head of the Petroleum Authority of Uganda Ernest Rubondo said they are in place to ensure optimal management of the sector and efficient management of the costs.

In a related development, government has revised the amount of crude oil so far discovered to six billion barrels, down from 6.5 billion barrels. Of the six billion barrels, the amount recoverable has also been put at 1.4 billion barrels, down from the initial range of between 1.7 and 1.9 billion barrels.  

Minister Muloni said after further analysis it was discovered that the oil in place and that is recoverable is at six billion barrels and 1.4 billion barrels respectively.

SOURCE: URN/Observer

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