Tullow Oil, Total SA and CNOOC will not see their joint exploration licence for Uganda’s Kanywataba block renewed, as the government reclaims oil asset for re-auction.
“Kanywataba prospect area … reverted to government following the expiry of the six months exploration licence which was issued to Tullow in February 2012,” said the Ugandan Energy Ministry’s Petroleum Exploration and Production Department (PEPD), reports Reuters.
Following Tullow’s acquisition of the exploration licence earlier this year, French Total and Chinese-owned CNOOC approached the company in a bid to buy into the project; the three companies eventually forming a joint-venture for the exploration of the block in a deal that cost Total and CNOOC $2.9 billion.
CNOOC had completed a single drilling attempt in the Kanywataba block in May without hitting oil reserves, before the licence reverted back to the government.
The government remains adamant that the area does contain oil, saying: “This area, which is undergoing restoration, remains prospective and will be available for future licensing after the new legislation is passed by parliament.”
The new legislation in question is intended to better regulate the country’s oil industry, which is in relatively early stages of development- Uganda having discovered oil only in 2006, along its border with the Democratic Republic of the Congo.
The oil rich region – known as the Albertine Strip – is thought to be home to some 3.5 billion barrels of oil. The discovery of oil on the Ugandan side of the Albertine basin has prompted increased interest in the DRC’s side of the area with suggestions that some of the reserves may be housed in connected geological structures.
The three companies have already submitted plans to the Ugandan government for the development of the Albertine Strip which lacks the necessary infrastructure to enable oil production to commence.
Total has indicated hopes that oil outputs could be seen from Uganda by as early as 2017.