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Uganda steps on licensing brakes



By Upstream staff 

Uganda has extended a freeze on handing out new exploration licences until next year to allow the government time to pass legislation that will regulate tenders and establish a state-owned oil company, Energy Minister Simon D'Ujanga said.

D'Ujanga said the Cabinet was close to approving policy documents, which would be referred to parliament next month.

"We suspended negotiations until it is out ... We hope the policy will be passed by next year," he told Reuters.

The central aim of the policy was to prevent the corruption and mismanagement that dogs many oil producers, he added.

Interest has been growing in the east African country after explorers Tullow Oil and Heritage Oil discovered crude in the Albertine basin, which spans the border between Uganda and the Democratic Republic of Congo.

Tullow has three blocks, two in 50-50 partnership with Heritage. Between them they have drilled eight wells, all yielding crude.

Tullow will drill a further well this month, targeting an oil prospect it believes could hold up to 800 million barrels.

The two companies say exploration is at an early stage but estimate reserves which could be in excess of a billion barrels, based on drilling and 3D seismic data. Another British company, Tower Resources, has held a block since 2005.

Uganda first announced a freeze on new licences in August, but had hoped it could be lifted in a month. D'Ujanga said the Cabinet was taking its time over the policy.

"It is a big document ... it provides for management of oil fields, production and how revenue is spent," he told the news agency.

The document will create an authority to regulate exploration and production plus a national oil company, NatOil, to enable the government to invest directly.

"If government is interested for example in processing oil products, we need a company to do that," D'Ujanga said.

He said a number of companies were on the waiting list, from the US, Europe and Asia. The government said 30 companies have applied for licences this year but were temporarily turned down while the policy is drafted.

He said China National Offshore Oil Corporation, as well as at least one Indian and one Malaysian company, are among the prospective bidders, but added none of the multinational outfits have yet expressed interest.

D'Ujanga said the government was working on the policy with officials from Norway - seen as a model for the management of oil wealth, investing it into a state pension fund for future generations.

"We have the experience of countries that are good examples and the others," D'Ujanga said. "Once we have a transparent policy in place there will be little room for corruption."

Ugandan President Yoweri Museveni pledged during a speech last week to invest Uganda's prospective oil wealth in long-term projects.

Heritage and Tullow want to pump oil via a pipeline to the Kenyan coast, should they find more than 300 million barrels.

UGANDA-OIL/ (INTERVIEW)|LANGEN|ABX|BNX|FUN


Thursday, 18 October, 2007, 11:55 GMT  | last updated: Thursday, 18 October, 2007, 11:58 GMT

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