Monday, April 29, 2019

UGANDA: Plans enter high gear for oil in Karamoja

Gold mining is a major economic acivity in Karamoja but that may change with the exploration of oil in the region

Uganda’s decision to aggressively promote the pristine Moroto Kadam oil basin is expected to offer the country different options of oil exploration, taking advantage of the colourful profile that the juicy Albertine graben has brought to the region, writes JUSTUS LYATUU.

With Uganda looking to put up both an oil export pipeline and a refinery, the need for more crude resources to feed both projects remains critical. Recently, Robert Kasande, the permanent secretary in the ministry of Energy and Mineral Development, said: “What we need now is aggressive promotion of this area (Moroto Kadam)” in order to attract private capital.

Already, the ministry says it has witnessed some oil seepages in the area, a sign that there is a working petroleum system there. The Moroto Kadam basin, found in the Karamoja sub-region, is closer to the Lokichar basin in neighbouring Kenya, where Tullow Oil has discovered just over 700 million barrels of oil.

While that appears prospective, investors will be keen to note that another neighbouring basin, Rhino, or Block Five as it was called then, in West Nile, turned out to be rather dry when Neptune Petroleum drilled three wells there less than 10 years ago.

But it is the success stories in the Albertine graben that are likely to spark the attention of investors. With a strike rate of more than 80 per cent, way above the international average of 30 per cent, the Albertine graben has been a regional wonder, attracting oil majors such as Total E&P.

Many investors will hope that the Moroto Kadam can offer just half of the prospects that the Albertine graben has delivered. Uganda needs more oil. With 1.4 billion barrels of commercial oil, the amounts remain low for both the crude export pipeline and refinery.

In fact, the oil companies – Total E&P and Cnooc - earlier made a suggestion to the Uganda government to allow them export the entire available crude through the Tanzanian port of Tanga so that they can recoup their investment at the expense of a delay in commissioning the refinery. Government knocked down that suggestion, considering that the refinery remains its flagship project in the oil industry.

According to Kasande, “in the next two years, we should be licensing Karamoja.” That process is likely to take on a competitive bidding process.

At the upcoming East African Community Petroleum Conference in Mombasa, Kenya next month, Uganda is expected to announce when it will undertake another round of oil licensing. Less than half of the Albertine graben is currently licensed out.

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