Uganda Discovers Oil

October 2009

After years of painstaking exploration, Ugandans heard what they have been longing to hear - the discovery of oil in their country. The country's President, Yoweri Museveni, made the announcement at a national thanks-giving service for the discovery of oil this weekend in Ugandan capital Kampala. Commercial production should start in 2009, says President Museveni.

The elated President said Uganda's search for oil, which cost companies at least US$ 70 million, started in the country's western regions, with the oil blocks of Waranga 1, Waranga 2 and Mputa in 1989. An Australian oil exploration company, Hardman Resources Ltd, made the discoveries in June this year but the government was waiting for a fitting day to make the news public to its citizens.

Hardman is operator and holds a 50 percent interest in Block 2, which is located in the northwest of the country and covers the northern part of Lake Albert and the surrounding onshore area. The most recent discovery, Waraga, is similar to the original discovery well Mputa, in that it has essentially three zones of oil bearing sands, according to the company.

The Waraga oil in all zones is believed to be of good quality. "This is an encouraging sign from both a reservoir flowing point of view as well as commercial standpoint where the crude may need minimal refining," Hardman notes, indicating that President Museveni's announcements are in tune with the oil company's predictions.

Mr Museveni said, soon his government would begin production and start building an oil refinery. Describing oil as a blessing for Uganda, President Museveni pledged to use the resource to fund development in the country. The Ugandan President said he expected production to begin in 2009, with initial production of 6,000 to 10, 000 barrels a day. This latest development may soon put Uganda among Africa's oil producing nations, chief among them Nigeria, Equatorial Guinea, Angola and Libya.

But President Museveni's speech fall short of disclosing how the oil will be produced or how the oil, how the oil fields will be put up for bidding or whether the government itself will do the exploration. He merely said Uganda has studied various oil production contracts around the world. He dismissed claims by some opposition politicians that oil could turn into a curse and lead to wars, as it had happened in other African countries.

President Museveni thanked God for at last turning successive layers of buried vegetation into crude petroleum of good quality. "Secondly, we thank God that he has given us the wisdom and foresight to develop the capacity to discover this oil while all the previous efforts had failed," he told his audience.

He said soon after he took over the government in 1986, he came in contact with the story of Albertine oil when a group of people representing Shell BP and Exxon wanted to be given oil exploration rights over the whole of Lake Albert.

"I later called in the civil servants and mining scientists first, led by Mrs Janet Opio, who was the Permanent Secretary in the Ministry of Water, Lands and Mineral Resources. I inquired from these civil servants whether there were people, in the whole of the Ugandan system, that were knowledgeable about petroleum. They told me that there was a petroleum 'expert' in the Bank of Uganda," he said.

"I requested them to bring me that 'expert'. The 'expert' came one evening. First of all, he was not a Ugandan; he was a Ghanaian; and, most amazingly, he was not even a scientist at all! He was an economist who worked in Bank of Uganda on import papers dealing with petroleum products," the Ugandan President told his amazed listeners.

He said as a result he refused to sign an agreement with Shell BP and Exxon because "I had nobody in Uganda knowledgeable on petroleum issues and I did not want to sell Ugandan interest at all." President Museveni went on saying his government was forced to send two young Ugandans to study first degrees in geology, physics or chemistry so that they could study masters in petroleum science abroad.

"Today, a core team of 25 professionals, 20 of them with Masters of Science degrees in these fields, has been put in place. It is this team that drafted our policy on petroleum exploration; did the aero-magnetic studies, using air-crafts that had started in 1982; did the seismological studies, based on land; as well as conducting some of the informed negotiations with the foreign oil companies," Mr Museveni boasts.

After an initial period of five years of training and capacity building, Mr Museveni said, the petroleum unit has been transformed into a department of petroleum exploration and production equipped with sophisticated equipment. The Ugandan president said after fifteen years of hard work, his government has now discovered "petroleum of good quality".

He added that the high oil prices on the world market couple with the erratic water levels on Lake Victoria, the Ugandan government has opted to pursue an Early Oil Production Scheme, which will involve setting up a mini-refinery to process a moderate amount of crude oil in order to produce diesel, kerosene and heavy fuel oil as well as develop a heavy fuel oil-based power plant to generate electricity.

He therefore urged Ugandans who panic about electricity to calm down. Uganda at the moment is consuming over 10,000 barrels of oil everyday and the import bill for its petroleum products stands over US$ 400,000 per year, Mr Museveni said while exploration continues, commercial production would start in mid-2009.

"Apart from discovering the oil underground, Uganda also has the capacity to produce bio-diesel - diesel from plants such as Jatropha (ekiroowa, etc) and Pongomia Pinnata (proposed to be imported from India). Some companies from Asia are ready to move in immediately. Government will establish joint ventures with some of them. In addition, of course, we are continuing with our plans to build Bujagali, Karuma, Ayago, etc. Therefore, the problem of shortage of energy, an unnecessary mistake in the first place, is on the way out."

A Ministry of Energy official in Uganda, Thomas Male, was quoted as saying that the three discovered fields in western Uganda have reserves of between 100 million and 300 million barrels. According to ‘Associated Press’, nor sooner than the discovery of oil was rumoured than wealthy Ugandans started scrambling to buy land in areas where exploration of oil is taking place.

By Afrol News