The Ministry of Energy and Mineral Development has invited four foreign oil companies to negotiate Production Sharing Agreements (PSAs) in Uganda’s first competitive licensing round. The ministry said it has completed evaluation of bids submitted by over ten oil companies and is ready to negotiate with successful companies.
The successful companies are Armour Energy Limited of Australia for the Kanywataba Block, to negotiate Production Sharing Agreements (PSAs), WalterSmithPetroman Oil Limited of Nigeria, for the Shallow and Deep Plays in the Turaco area, Oranto Petroleum International Ltd of Nigeria for the Shallow and Deep Plays in the Ngassa area and Niger Delta Petroleum Resources Ltd of Nigeria for the Shallow and Deep Plays in the Ngassa area.
In a press statement released on Monday, the energy ministry said government of Uganda will negotiate five PSAs with these companies and issue five exploration licenses, upon successful negotiation. The five PSAs are one for the Kanywataba block and two for the shallow and deep plays of the Turaco and Ngassa blocks respectively.
Negotiations for the five PSAs will commence during the first week of August 2016 and are expected to be concluded during the month. Ernest Rubondo, Director for Petroleum in the Ministry of Energy & Mineral Development (MEMD), is quoted in the statement saying that negotiations for these PSAs is the final milestone before granting exploration rights over these areas.
The key aspects to be discussed during the negotiations will include the respective work programmes, National Content and the fiscal aspects like Royalty which were biddable. Further due diligence will be undertaken on the successful bidders with regard to their financial, technical and Health, Safety and Environment management capabilities prior to the issuance of licenses.
Rubondo added that the investments and activities arising out of the exploration work under these new exploration licences are expected to come at the same time as the investments and activities of developing the already discovered oil fields in the country and those for constructing the infrastructure for commercialization which include a refinery and an export pipeline.
These multiple activities will lead to a significant increase in investment in Uganda’s oil and gas sector and an increase in its knock-on effect on the other sectors of the economy. Uganda’s first licensing round is being 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.