Tullow Oil has invested $2.8 billion (Shs7 trillion) in exploration for oil and the acquisition of Heritage Oil’s interests in Uganda since 2004, when it started its operations, Jimmy Mugerwa, the general manager, Tullow Uganda Operations Pty Ltd has said.
Mugerwa announced the capital investment at the launch of Tullow Uganda Country Report and Media Engagement, at the Sheraton Kampala Hotel on November 22, 2013. The Uganda Country Report is the first publication in which Tullow provides detailed information about its operational activities, and economic contribution to Uganda. The Country Report, is one of the many through which Tullow seeks to improve the quality and depth of information it gives its stakeholders.
“Tullow was one of the first exploration companies to risk its capital and invest in finding oil in the Lake Albert Rift Basin. To date almost 80 wells have been drilled by Tullow, underpinning gross resources of around 1.7 billion barrels of oil. Together with our partners we are now working closely with the Government of Uganda to achieve First Oil, whilst respecting Uganda’s rich social and environmental heritage,” he noted.
According to Mugerwa, the impact of the discovery of oil in Uganda has yet to be fully realised, saying the revenue from oil production has the potential to transform the country.
“Once production commences, the government’s current potential share of oil resources is estimated to be $50 billion, representing approximately 80% of oil revenues after explorations costs are recouped, based on approximate reserves of 1.7 billion barrels of oil,” he said.
In addition to investments in the exploration, Tullow Uganda has also spent $200 million with 550 local businesses since 2004. This, he added, has helped the company to better manage risk and costs by creating a good strong competitive supply base within Uganda.
Eng. Irene Muloni, the Minister for Energy and Mineral Development, who was the chief guest, commended Tullow for coming up with the report that showcases the milestones that have been reached in the development of Uganda’s emerging oil and gas sector.
“The investments in petroleum exploration have led to the confirmation of over 3.5 billion barrels of oil in place with between 1.2 billion to 1.7 billion barrels of recoverable petroleum resources in the country,” Muloni said.
“As we progress towards development, these investments are expected to increase exponentially. Ugandans must therefore continue to prepare themselves to benefit from these developments.”
According to the Tullow Uganda Country Report, the estimated capital investment for the upstream development of Uganda’s resources discovered in the Lake Albert Rift Basin will be in the region of $8-$12 billion.
The development phase will take approximately three years after the final investment decision. “This implies timely completion and approvals of the Field Development Plans (FDP’s) which will lead to getting the Final Investment Decisions by the various company boards with the next 24 months. “The scale and complexity of the project plus geographical characteristics and upgrading needs to start NOW to ensure First Oil as soon as possible,” Mr Mugerwa told guests at the launch of the report.
One of the key things that will unlock the fast tracking of the FDI is the signing of a memorandum of understanding (MOU) between the government and Tullow Uganda and its partners Cnooc and Total.
Ms Muloni said the government will next week finalize the discussions with Tullow and its partners regarding an MOU for the commercialization plan for the discovered resources.
“Given the drilling success rate of over 87% in the Albertine Graben and the progress made towards commercialization through an extensive appraisal process and fast tracking the development of infrastructure to support production, Uganda looks forward to a long lasting partnership with Tullow Oil and her partners in ensuring that these resources create lasting value to our country,” Muloni said at the launch of the Tullow Uganda Country Report.
She added that her Ministry has received applications for production licenses over eight fields in Exploration Area 2 which is under the operator-ship of Tullow, after successful conclusion of their appraisal. “These applications are being reviewed and we are optimistic that the discussions with Tullow will be concluded to enable my Ministry issue production licenses over these fields,” she said.
The commercialization of Uganda’s oil and gas resources is expected to generate up to 150,000 indirect and direct jobs in Uganda and thousands of opportunities for the oil and gas industry suppliers. Such opportunities include services like transport, hospitality, communications, banking, catering, waste management, IT services, construction, training, and emergence services, advertising and public relations.
Over the past nine years, Tullow Uganda has also invested up to $1.8 million in social investments in the fields of education and health. For instance, in education alone, under the Tullow Group Scholarship Scheme, Tullow Oil has awarded over 40 post graduate scholarships worth $2.4 million to educate Ugandans in studies that are related that to the oil and gas industry, in leading universities in the United Kingdom.
The company has also kept a good track record in Environment, Health and Safety (EHS). According to the Country Report, the Tullow Uganda team have successfully completed five million hours with no Lost Time injuries in the last two years. This demonstrates the strength of Tullow’s EHS’s policies. At the media engagement, the minister of energy commended Tullow for its effort in maintaining high EHS standards and their endeavors to work with and support the communities that host their operations.