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Uganda to Sign Exploration Deals in June & Selects Firms for Refinery Talks

Source: Reuters 5/17/2017, Location: Africa

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Uganda's energy ministry said it would award three exploration licences next month and also said it had selected two firms with whom it would start negotiations for a possible agreement to develop a planned crude refinery. Last August Uganda selected Nigerian firms WalterSmithPetroman Oil Limited, Oranto Petroleum International, Niger Delta Petroleum Resources and Australia's Armour Energy Limited as winners for its latest licensing round. The four companies were then invited to start negotiations for five production sharing agreements (PSAs) covering four blocks.

Energy Minister Irene Muloni said in an emailed statement laying out the ministry's performance over the last 12 months that they would issue three licences next month. "Three exploration licenses are due to be issued in June 2017," she said, without naming the firms that deals would be signed with.

Crude oil reserves estimated by government geologists at 6.5 billion barrels were discovered in the Albertine rift basin along Uganda's border with Democratic Republic of Congo (DRC) in 2006. But taxation spats, disagreements over field development strategies and delays in erecting infrastructure such as an export pipeline have repeatedly pushed forward the date for commencement of production.

Uganda is now looking to start production in 2020 when construction of an export pipeline through neighbouring Tanzania is due to be completed.

Uganda has also been pursuing a tender for developing a $2.5 billion refinery to process part of the crude from its oil fields. "Two companies have been selected for negotiations. The target is to complete the process this year, 2017," Muloni said, without disclosing the names of those picked. An initial process to get a developer for the refinery project was halted in July last year after the government suspended talks with a consortium led by Russia's RT-Global Resources which had won an initial tender. Subsequent negotiations with a consortium led by South Korea's SK Engineering also collapsed.

Muloni also said Uganda was considering terminating a contract with a Chinese led consortium, which was given a concession to revive copper mining at Kilembe in the country's west in 2013. The firm, Tibet Hima Mining Company Limited, "has so far not performed as agreed and government is reviewing the Contract, with a consideration of terminating the concession."

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