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New date for Uganda oil production

Tuesday, 21 February 2012 | 00:00
Commercial oil production in Uganda will commence in 2015 the same time the refinery is set to be completed, a senior ministry official has said.
Speaking during the Uganda Revenue Authority (URA) Open Minds Forum in Kampala last week, Mr. Robert Kasande, the Assistant Commissioner for Geology in the Ministry of Energy and Mineral Development, disclosed that the construction of a refinery could take three years and would coincide with the time oil will start flowing.
"Commercial production of the oil will start when the construction of the refinery is complete in about three years' time, so in 2015/16 production will have started,” Kasande said.
We shall begin with a small refinery that will be able to produce about 20,000 barrels a day then we'll move onto a bigger one with the capacity to process 60,000 barrels a day", Kasande said. Responding to a question as to whether Uganda will export oil, Kasande said that would depend on many factors.
"We discovered commercial deposits of about 2.5 billion barrels and we can only drill about 40% (1billion barrels) and this can only cover the domestic demand. However, if we discovered new oil deposits then there will definitely be a need for a pipeline to transport the excess oil", he said.
According to experts, the oil discovered in Uganda can only last 25 years at a rate of drilling 60,000 barrels a day.
There has recently been an uproar from the public following the signing of agreements between Tullow Oil and the government and the Open Minds Forum was an avenue to clarify this.
Kasande said, "The agreements that were signed recently were not new agreements. These were Production Sharing Agreements (PSAs) which are actually beneficial to the government because the title to the crude remains with the resource owner (government) and also determines the disposal of the crude."
He also clarified that the PSAs are preferred to Concession Agreements where the title to the crude stays with the producer who also determines its disposal.
Mr. Ajee Mamman, a Lecturer at the University of Aberdeen in Scotland said that unlike joint venture agreements that require lots of money up-front, PSAs are important especially for economies that do not have huge reserves.
Souce: Business Week
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