Uganda’s government on Tuesday issued eight oil production licenses to two foreign companies, moving the East African country closer to becoming a producer of crude.Five of the licenses were granted to Britain’s Tullow Oil while France’s Total was given three, after years of regulatory delays and tax disputes.
Between 200,000 and 230,000 bbls of crude will be produced daily by three oil companies, with up to 60,000 bbls of that oil refined within the country, according to figures from Uganda’s government. The rest will be exported through a pipeline leading to the Tanzanian port city of Tanga.
The China National Offshore Oil Corporation (CNOOC), previously had been granted a license to operate in Uganda, which in 2006 discovered commercially viable deposits of crude in the Albertine region bordering Congo.
Representatives of the oil companies and Uganda’s government signed agreements in the capital, Kampala. Each license is good for 25 years and can be renewed for an additional five years. Uganda hopes to become a crude producer in 2020.
“The granting of these production licenses today is a critical milestone for both Uganda and the three companies currently licensed to undertake petroleum exploration, development and production in the country,” Uganda’s Ministry of Energy and Mineral Development said.
Total and Tullow Oil are expected to make a final investment decision within 18 months. They are expected to spend over $8 billion on production infrastructure, including drilling about 500 wells and constructing holding facilities.
Uganda’s government has said the oil companies will carry out environmental impact assessments and draw plans to resettle people displaced by the oil-related activities.