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Developments in Uganda’s Oil and Gas Sector

 -September 2011-

Oil and Gas Exploration activities in the Albertine Graben (AG) of Uganda have had a 90% drilling success rate, with 58 of the 64 exploration and appraisal wells drilled to date encountering oil and/or gas.  Oil seeps were reported along the shores of Lake Albert in the 1920’s and the search for oil in Uganda commenced.  The activities slowed down in the 1940’s up to the 1980’s mainly due to political instability in the country. 

The revival period started in the 1980’s with the acquisition of aeromagnetic data over the entire AG. Government commenced systematic training and capacity building of staff in petroleum related studies in the late 1980s with a view of taking forward the development of the industry from an informed position.


In 1985, the Petroleum Exploration and Production Act was enacted, followed by the Regulations in 1993. The Petroleum Exploration and Production Department (PEPD) in the Ministry of Energy and Mineral Development was established.


Dafora F200 rig drilling the Mputa-2 appraisal well in Kaiso-Tonya area.jpgThe first commercial discovery of oil in Uganda was made in 2006.  Twenty (20) oil and/or gas discoveries have since been made, with five of these now at Field Development Stage.


In order to better address the emerging sector, Government formulated the National Oil and Gas Policy for Uganda. The policy was formulated through a wide consultative process and approved by Cabinet in 2008. It articulates, among other things, the key issues for the sector, guiding principles, policy goal, objectives together with strategies and actions to meet the desired objectives. 

The goal of the National Oil and Gas Policy is “to use the country’s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society”. This Policy is currently being implemented. The following are some of the activities being undertaken in order to meet the objectives of the policy;
a)               Objective 1; Efficiency in licensing Areas with the Potential for oil and gas.
There is currently a halt in licensing of new acreage to allow for new petroleum Resource Management Law to replace the current Petroleum Act of 1985. The draft bill was circulated to stakeholders for comments and 24 critical reviews were received. The second draft is now being finalized in consideration of these comments, before it is presented to Cabinet and Parliament.
High potential acreage has been returned to Government through relinquishment obligations by the oil companies.
b)               Objective 2: Establish and efficiently manage the oil and gas resource potential.
There has been an increase in the country’s resource base from 300 million barrels of oil equivalent when the policy was approved to 2.5 billion at the end of 2010.
An efficient Resource Management framework is also being put in place through the creation of sound Institutional Framework which separates Policy Setting, from Regulation of the Industry and Commercial Businesses. This will lead to creation of a Directorate of Petroleum; a Petroleum Authority of Uganda; and a National Oil Company.
c)               Objective 3: Efficiently produce the country’s oil and gas resources
There has not yet been production in the country. However, Government has received and is reviewing applications for production licenses together with field development plans for some of the discoveries. Extended Well Testing as part of the ongoing appraisal programme for some the oil and gas discoveries made in the country is ongoing. This will provide improved understanding of Reservoirs as we plan for production. In addition, an Integrated Power Project will use gas from Nzizi gas discovery and some of the crude oil from testing to power a 50MW station.
d)               Objective 4: Promote valuable utilization of the country’s oil and gas resources.
A feasibility study on refining in Uganda was concluded in September, 2010 and has been approved by Government. This study defined the key aspects of developing a refinery in Uganda like size, configuration, location, financing and markets for the products. The study recommended “Kabaale” in Buseruka Subcounty, Hoima District as the most optimum location for the refinery. Specific aspects of implementing the development of this refinery have commenced such as acquisition of land for the development.
e)               Objective 5: Promote the development of suitable transport and storage solutions
A petroleum transportation and storage study for the country has commenced. The study will cover both transportation of crude oil from the fields to the refinery and petroleum products from the refinery to markets. 
f)                 Objective 6; Collection of the right revenues and use them to create lasting value.   
The existing Revenue Management Policy is being reviewed with a view of putting in place appropriate legal framework for petroleum revenue management. In addition, Tax legislation has been updated to deal with Petroleum Revenues. In this regard, Government through the Uganda Revenue Authority collects Capital gains tax from sale of company interests.
 g)             Objective 7: Ensure optimum national participation in oil and gas activities.
Government has concluded a study on Ugandan local content development strategies for the oil and gas sector that will promote indigenous private sector service provision and competitiveness. 
h)               Objective 8: Development and maintenance of national skills and expertise.
This is being achieved through the establishment of training institutions and Capacity Building for Government Institutions.  Government established the Uganda Petroleum Institute at Kigumba (UPIK) which was opened in March 2010 and is offering diploma and certificate courses in petroleum related studies.  Makerere University began a Bachelors degree programme in Petroleum Geoscience, which is being supported by the University of Bergen in Norway.
i)                 Objective 9: Environment protection and biodiversity conservation.
A Multi-Institutional monitoring team is in place and Biodiversity Institutions are working together to efficiently manage the interface between petroleum and the environment. An Environment Sensitivity Atlas for the areas where petroleum has been discovered in the country was developed and a Strategic Environment Assessment of these areas is ongoing.
j)                 Objective 10: Mutually beneficial relationships between all stakeholders.
Government has developed and is implementing a National Communication Strategy to bridge the communication gap between the oil and gas industry and the general public. 
Government is committed to effective and efficient management of the Oil and Gas Sector.


For More Information Contact;

Ministry of Energy and Mineral Development,

Petroleum Exploration and Production Department

Tel: +256 414 320714, Fax: +256 414 320437
psmemd@energy.go.ug / pepdebb@petroleum.go.ug  Web; www.energy.go.ug/ www.petroleum.go.ug


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