Uganda, the Cheapest Place to Find Oil in the World

Filed under: Business |
ugandan oil 300x150 photo

Ugamdan drilling platform

The cost of finding commercial oil reserves in Uganda is less than a dollar compared to the global trends justifying increased investors’ appetite for petroleum exploration licenses.

“On the global scale the finding cost range between $5 and $25 per barrel,” Ernest Rubondo, the commissioner of Uganda’s petroleum and exploration department, disclosed.

“Uganda competes favourably with a finding cost of less than one dollar per barrel.” So far risk capital invested in seismic surveys, exploratory and appraisal drilling amounts to $1.4b.

And 20 oil/or gas discoveries have been so farm made with over 2.5 billion barrels of crude oil reserves in place. It is estimated that over a billion barrels oil equivalent is recoverable. Interestingly less that 40% of the Lake Albert rift -with potential of oil and gas- has been exploited.

A total of 71 oil wells have been drilled and only three did not encounter hydrocarbon representing over 90% success discovery rate.

The discovered assets elevate Uganda in the league of oil producing countries like Peru, Trinidad & Tobago, Dendmark, Italy and Romania in Latin America and Europe.

In Africa, Uganda joins Chad, Congo Brazavile and Tunisa. In Asia, Uganda falls in the group of Brunei and Thailand.

But still a long way from the tens of billion in Nigeria, Libya and the United States or the hundreds of billions of barrels in Iran, Iraq, Kuwait, Venezuela or Saudi Arabia.

Rubondo explained that the oil and gas industry is very capital intensive and high risk, adding that significant investments is expected in field development, production of the crude oil, processing and transportation facilities.

“Efforts are now being made to commercialize the discovered resources, initially though power generation and subsequently through refining the crude oil,” he said.

“A study to evaluate development of pipe lines and storage facilities for crude oil andgas in Uganda has been concluded.”

Fred Kabagambe-Kaliisa, the permanent secretary in the ministry of energy and mineral development, said over 80 international oil companies have applied for licences.

He said government was opting for gradual and competitive licensing as a way of prolonging production and efficient resource management.

“The national oil and gas policy is the key policy document guiding the developments in the sector and it is crucial benchmark for governance of the oil and gas industry,” he said.

“Government is committed to working with all stakeholders to ensure effective and efficient development of the sector to benefit all Ugandans.”

Kabagambe-Kaliisa said that a communication strategy for the oil and gas sector was development and there has been increased engagement with civil society, parliament, local communities and their leaders and the media.

He revealed that government has received application for production licences over Waraga, Kingfisher, Nzii and Mputa fields which are under review.

“Oil companies are being compelled to employ Ugandans and give business opportunities to Uganda companies,” he said.

“There has been increased training for Ugandans in oil and gas professions abroad from both public and private players.”