Three Nigerian firms bid for oil blocks in Uganda’s maiden licensing round

Photo credit: Bloomberg
Photo credit: Bloomberg

Three Nigerian oil and gas exploration and production (E&P) companies were among seven prospective bidders shortlisted to participate in the maiden oil licensing bid round for oil blocks approved by the Ugandan government.

The Ugandan Ministry of Energy and Mineral Development said it received bids from interested investors for the seven blocks located in the country’s Albertine Graben area.

The three Nigerian firms include WalterSmith Petroman Oil Limited; Oranto Petroleum International Limited, and Niger Delta Petroleum Resources Limited.

The trio would be competing against two Australian firms, namely Armour Energy Limited and Swala Energy Limited. Other bidders include Rift Energy Corporation of Canada and Glint Energy LLC of USA.

All the applicants, who were among 16 potential bidders issued with the bidding documents on October 1, 2015, had met the February 26, 2016 deadline for the final submission of their bids for approval the ministry said.

The bidding document comprised the Request for Proposal, Model Production Sharing Agreement 2015 (MPSA), Model Confidentiality Agreement for sale of data, Petroleum (Exploration, Development and Production) (Data Sale) Regulations 2014 and Petroleum (Exploration, Development and Production) (Data Sale) (Amendment), Regulations 2015.

The six oil blocks on offer comprise of the Ngassa, measuring about 410 square kilometres, located in the Hoima District; Taitai & Karuka (565 Km2) in Buliisa District; Ngaji (895 Km2) in Rukungiri & Kanungu Districts; Mvule (344 Km2) in Moyo and Yumbe Districts, together with Turaco (425 Km2) and Kanywantaba (344 Km2) in Ntoroko District.

Permanent Secretary of the Ugandan Ministry of Energy & Mineral Development (MEMD), F.A Kabagambe-Kaliisa, said that the attraction of the seven bidders was significant taking into consideration the current low global crude oil and gas prices.

Mr. Kabagambe-Kaliisa said evaluation of the bids was based primarily on the proposed work programme, technical and financial capability, national content, health, safety and environment, proposed royalty and signature bonus.
“Government will conclude the licensing round by negotiating with successful bidders, sign Production Sharing Agreements and award Exploration licenses by the end of June 2016,” the Permanent secretary said.

Uganda’s first licensing round is guided by the National Oil and Gas Policy for Uganda (2008) and the Petroleum (Exploration, Development and Production) Act 2013.

The planned allocation of oil blocks appears to be against the recommendation of over 60 non-governmental organisations and tourist groups, which issued a joint statement in January 2016 calling for an agreement between Uganda, the Democratic Republic of Congo and the United Nations Educational, Scientific and Cultural Organization, UNESCO, to prevent drilling in the area.

Regardless, while commending Ugandan government for publishing the list of bidders for the licencing round, Global Witness expressed concerns about environmental risks posed by oil exploration to the Virunga World Heritage site, and the credentials of some of the shortlisted oil companies.

George Boden of Global Witness said the Ugandan government must carefully check out the background of each bidding company and publish the details of all of their real owners to ensure they possess the technical and financial capacity to develop the oil resources without any conflict of interest.

Mr. Boden drew attention to the Ngaji block, which he said was of particular concern because of its expanse through half of Lake Edward and a large part of Queen Elizabeth National Park, which forms part of Virunga region, Africa’s oldest national park.

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