Oil production licences to be issued this year - government

Workers undertake the first flaring test at the Waraga 1 well in Kaiso-Tonya in Hoima District in western Uganda. The petroleum authority is yet to issue production licences to oil companies. FILE PHOTO  

By  FREDERIC MUSISI

Kampala- Five oil production licences will be issued by the end of this year, a government official has said.

Speaking to journalists at an international oil and gas conference in Kampala on Wednesday, the head of the petroleum directorate, Mr Ernest Rubondo, revealed that they plan to issue around five production licences later this year to France’s Total E&P and UK’s Tullow PLC.
He said: “Issuance of the production licences like you heard awaits operationalisation of a petroleum authority but [we] hope before this year ends we will get this out of the way.”
Meanwhile, absence of an operational petroleum authority has been blamed for the delayed issuance of production licences to oil companies.

The petroleum authority, according to the Petroleum Act, is the body charged with, among others, monitoring and regulating oil activities, administering petroleum agreements, and ensuring that licenced oil companies uphold laws, regulations, rules and contract terms.

Speaking earlier at the same event, the assistant commissioner at the petroleum directorate in the Energy ministry, Mr Frank Mugisha, said vetting of members to manage the authority had been completed but were awaiting instruments of power.

“Most activities like issuance of production licences cannot take place without the petroleum authority,” he said.
Parliament early this week approved names of the proposed members of the authority board led by Dr Jane Mulemwa. The management team is however yet to be constituted.

A production license is the final phase in the oil production cycle - exploration, appraisal, development and production, eventually leading to commercial oil production.

“A production licence usually runs up to 25 years, so for such a contract you have to ensure that all loopholes are fixed in order to simply things for both government and the oil companies,” Mr Rubondo said.
However, Daily Monitor understands the draft production licences are currently with the Minister of Energy.

The government in 2013 awarded one conditional production licence over the Kingfisher field operated by China’s Cnooc.

musisif@ug.nationmedia.com