April 13, 2012 / 3:18 PM / in 6 years

Total to spend over $300 mln on Uganda exploration

KAMPALA (Reuters) - French oil company Total plans to spend over $300 million in 2012 on exploration in Uganda where small-scale commercial oil production is expected to begin later this year.

Total, China National Offshore Oil Corporation (CNOOC) and British explorer Tullow Oil in February signed a $2.9 billion deal to ramp up output in the east African country’s nascent oil sector.

Uganda discovered commercial hydrocarbon deposits in the Albertine rift basin along its border with the Democratic Republic of Congo in 2006.

The success of Total’s partnership is key to unlocking a $10 billion investment in vital infrastructure to allow Uganda to start pumping oil to world markets.

Each of the partners has a stake in five exploration blocks - EA-1, EA-1A, EA-2, Kanywataba and Kingfisher Discovery. Total operates blocks EA-1 and EA-1A.

“As far as the block EA-1 operated by Total is concerned a very intensive appraisal program is being carried out,” Loic Laurandel, general manager Total E&P Uganda, told a parliamentary committee probing bribery accusations in the oil sector.

“On the new block EA-1A, up to seven exploration wells may be carried out by February 2013...more than $300 million will be spent on these two blocks in 2012.”

Tullow operates blocks EA-2 while CNOOC operates Kanywataba and Kingfisher Discovery.

Tullow says it has confirmed 1.1 billion barrels of oil in the EA-1, EA-2 and Kingfigher blocks and believes there are 1.4 billion barrels left to find.

The government says 2.5 billion barrels of oil are confirmed in place, of which between 1 billion to 1.2 billion barrels are recoverable.

In October Uganda’s parliament appointed a committee to probe accusations of corruption in the oil sector.

The move followed presentation of documents by a lawmaker, Gerald Karuhanga, who accused Tullow of making payments to Prime Minister Amama Mbabazi, Minister of Foreign Affairs Sam Kutesa and Minister of Internal Affairs Hilary Onek.

Appearing before the same committee on Wednesday, a Tullow delegation led by its General Counsel and Executive Director Graham Martin said it was innocent of the accusations and that Karuhanga’s documents were forged.

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