Country says receives seven bids in oil exploration licence round

March 2, 2016 11:56 AM

The blocks on offer are in the Albertine rift basin, close to the border with DRC, where commercial oil deposits are estimated by government geologists to total 6 billion barrels.

Workers are seen at an oil exploration site in Bulisa district approximately 244km (152 miles) North-West of Kampala January 20, 2012. REUTERS/Stringer

Uganda has received seven bids for six oil exploration blocks offered in a licensing round and it plans to chose the winners and sign deals by the end of June, the Ministry of Energy and Mineral Development said on Wednesday.

Oil deposits were discovered in Uganda along its border with Democratic Republic of Congo (DRC) in 2006 but delays in erecting the necessary infrastructure, tax wrangles and the drop in the oil price have delayed the start of production.

The six blocks are in Ngassa, Tai Tai & Karuka, Mvule, Turaco, Kanywantaba and Ngaji. Ugandan officials say they are targeting commercial oil production by 2018 at the earliest.

Also on Wednesday, Uganda and Tanzania announced they are planning to build a pipeline from Ugandan oil fields to the Tanzanian coast to help export Uganda's crude once production starts.

Uganda announced its first competitive bidding round for the six exploration blocks, covering a total of 3,000 square kilometres, in February last year. Bidding documents were issued to 16 oil firms in October.

In the statement, the Ministry of Energy and Mineral Development said seven of the 16 had submitted final bids.

"The attraction of seven bidders is significant, taking into consideration the current low global oil and gas prices," the statement said, adding that the companies came from Australia, Nigeria, Canada and the United States.

"Government will conclude the licensing round by negotiating with successful bidders, sign production sharing agreements and award exploration licences by the end of June 2016," the statement said.

None of the three oil firms already operating in Uganda - London-listed Tullow Oil, France's Total and China's CNOOC - was among the bidders.

Environmental groups including Global Witness and Greenpeace have protested the inclusion of Ngaji, a 895 square kilometre area that is part of Virunga park along Uganda's border with Democratic Republic of Congo.

"Uganda and Congo should make a deal ... to protect Virunga from oil activities," London-based Global Witness said in a statement this week, adding that drilling there would be a "disaster" for the people and animals in the park.