Energy Minister Irene Muloni has confirmed to EagleOnline about reports that two foreign companies are expected to spend over $8 billion on Uganda’s oil production.
Ms. Muloni said the multibillion investments will be sunk into production infrastructure, including drilling about 500 wells and constructing holding facilities.
On Tuesday, Uganda granted five production licenses to UK-listed explorer Tullow Oil and three to France’s Total, clearing a major hurdle as the country aims to move more quickly toward crude production.
“Ugandans have been eagerly looking forward to this announcement and my ministry is happy to say now time for serious work to start,” Muloni confirmed when contacted about the reports as cabinet heads for a retreat to evaluate government performance for financial year 2015/16.
“The revenue will be ploughed into other sectors to develop Uganda,” she said urging Ugandans, to get ready to partake in the participation of the industry.
The licenses which cover Exploration Area One (EA1), operated by Total, and Exploration Area Two (EA2), operated by Tullow and are valid for 25 years but can be renewed for an additional five years. Uganda hopes to become a crude producer by 2020.
Tullow and Total are required to make final investment decisions 18 months after receiving the licenses and Muloni said commercial oil production was expected to begin in 2020.
When production from all the nine licensed areas starts, output would be between 200,000-230,000 barrels per day, Muloni said on Tuesday.
The China National Offshore Oil Corporation, or 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.
President Museveni recently said Uganda had to build a $2.5 billion refinery to process its crude so it can earn more from its oil resources.