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Total to drill eight Uganda wells, spend $650m

French energy giant eyes new sites by the end of 2013, aiming for a larger share of the African nation's burgeoning petroleum industry

Reuters, Sunday 16 Sep 2012
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Total SA expects to drill eight exploration wells in Uganda by end 2013, and will spend about $650 million on its activities in the same period, a senior company official said on Saturday.

Total entered Uganda's burgeoning petroleum industry early this year after it and China's China's CNOOC took up a third each of British explorer Tullow Oil's exploration assets in the country for a total of $2.9 billion.

"Total E&P Uganda is currently continuing the exploration, delineation and appraisal campaign initiated by the previous operators," Loic Laurandel, Total E&P Uganda's general manager told Reuters on Saturday.

"The first oil exploration well will be drilled by the end of 2012 and eight new exploration wells will be drilled by the end of 2013."

Uganda discovered oil in its west along the border with the Democratic Republic of Congo, in 2006. Production had been expected to start early this year but wrangling over tax and other issues delayed development.

Tullow Oil and the government are negotiating how to best settle tax issues and a hearing is scheduled for later this year if the company fails to reach a settlement with the revenue authority.

Laurandel said Total, which operates block 1 on the northern tip of Lake Albert, will spend about $650 million on exploration and appraisal drilling and seismic data acquisition by the end of next year.

Uganda has said it was searching for an advisor to help it secure financing for a planned refinery to process its crude.

Tullow says the refinery's capacity should not exceed 60,000 barrels per day to be attractive to investors but the government wants a facility with a maximum output of 120,000 barrels per day is viable and can easily attract investors.

Total supports the project but Laurandel said the company could not comment on whether it will invest in it or state its preferred size of facility because disclosure of its positions was likely to undermine discussions with the government.

"Sufficient resources exist (1.8-2.2 billion barrels) to deliver a plateau production rate of 200-230,000 barrels per day in support of an appropriate sized refinery," he said.

"We think that an international crude oil export pipeline, combined with an optimally sized refinery will provide the maximum benefit to the wider Ugandan economy."

Uganda is expected to conduct a licensing round for hundreds of square kilometres of exploration acreage after parliament passes new oil laws expected by the end of this year.

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