Uganda may earn more from oil than expected

Aug 08, 2006 02:00 AM

Uganda is believed to earn greater revenues from its oil discoveries in the western region than was earlier reported.
Local reports said recently the government had negotiated a 30 % share and 70 % for the oil drilling company in extracting the oil reserves along Lake Albert, west of Uganda.

But the ministry of energy and mineral resources said the government will get a royalty, then the company will recover their costs up to 50 % to 60 % and what is not recovered is carried forward to subsequent years.
"The remaining oil (profit) is shared between the government and the company. All these sharing ratios and royalty percentages are negotiated and contained in the production sharing agreement," said the ministry. The ministry was, however, non-committal on actual figures.

So far, two drilling companies, Heritage Oil and Hardman Resources with its partner Tullow Oil have spent $ 80 mm, but the project amounts will depend on the progress of the exploration and the sizes of the discoveries made.
Hardman Resources, the company exploring on block 2 along Lake Albert, drilled three wells. One well, Waraga-1, was tested and reported a flow rate of over 12,000 barrels of oil per day.

A national oil and gas policy is being formulated and will include a provision on payment, use and management of petroleum revenues.
The recent oil discoveries have brought high hope for the oil importing country to be oil producing one, who has been spending huge amount of money on imported fuel through Mombassa port, Kenya every year.

Source: Xinhua
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