Gov’t explains delays in oil exploration

Government has explained that repeated changes in the oil production date have been occasioned by a careful process that is intended to see Ugandans and government benefit fully from the oil resource.

The date for Uganda’s first oil production has been shifting over the years. From 2013 it was moved to 2015/16 after which it was pushed to 2018. By the end of 2018, the government had announced three different dates upon which Ugandans will be able to see that very first barrel of crude oil that signals the start of oil production.

According to Robert Kasande, the Ministry of Energy Permanent Secretary, the tentative date is now 2022. The delay was mainly because the joint venture partners Total, China National Offshore Oil Company (CNOOC) and Tullow needed to make the Final Investment Decision to develop the oil fields in Tilenga and Kingfisher blocks.

This delay has been a key concern for many investors targeting to tap into the oil industry – from real estate to transport and logistics to services like banking.

Knight Frank Uganda, an estate agent, recently informed reporters that the delay in oil production had seen some key players in the industry, including Tullow, Total E&P, and CNOOC send back experts to their countries of origin.

This meant that the houses they had hired for them were surrendered back to the market. Patrick Mweheire, the Stanbic bank Chief Executive Officer also said the delay meant a delayed opportunity for the banking industry.

But Robert Kasande told Journalists in Kampala on Monday afternoon that the Final Investment Decision (FID) will be made mid this year and the development capacity will start early next year. He added that there are some countries that have rushed to get oil out of the soil but regretted later.

Kasande said the government will try to entice more investors into Uganda’s oil industry at the upcoming oil and gas conference in Mombasa early next month where Uganda will announce the next licensing round for seven blocks in the Albertine region.

The government late last year revised the amount of crude oil so far discovered to six billion barrels, down from 6.5 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.

Earlier Kasande said that the discovery of more oil equally delayed the process, alongside several other sectors.

“We thought we would produce earlier when he had only found 300 million barrels but we found 1.4 billion barrels of recoverable oil forcing us back to the drawing board to plan for efficient production of the oil,” he said.

Kasande added that the country is also affected by being landlocked with no oil and gas infrastructure. “We had to involve Kenya and Tanzania who have promised to invest in the pipeline and these agreements took time as well,” Kasande added.