Tullow shifts crude oil production to Uganda's Buliisa

Uganda's early oil production location has been shifted to Kasamene field in Buliisa from Mputa in Kaiso-Tonya, Hoima district.
However, analysts warn that the move would further delay the transformation of the crude oil into cash. Tullow Oil, which agreed to kick-start an early production scheme to meet the country's fuel demand, will initially produce between 10,000 to 20,000 barrels of oil per day with capacity of expansion.

In its report, the Irish owned firm said an integrated project team was working on a plan to develop the whole oil basin.
"A phased development of the basin is envisaged, prioritising oil for local and regional energy and fuel requirements and export in the later phases of development," Tullow said. "Early production from the Kasamene field is expected to be achieved through extended well tests in 2010."

The abandonment of Mputa oil field, according to experts, will prolong the commencement of the early oil production scheme because the new site would require afresh environmental impact assessment, resettlement studies, financial and feasibility assessments.
Mputa oil field underwent detailed and extensive studies, which were given a clean bill of health to continue with the production by the National Environment Management Authority, the Uganda Wildlife Authority and other stakeholders.

"Mputa is not abandoned but more complex and therefore not cost- effective with low per barrel value and high infrastructure costs," Andy Demetriou, the Tullow Oil Uganda operations external relations advisor, explained.
"Kasamene is larger, less complicated and more integrated into other major fields. Mputa field remains part of the overall future plans."

According to Tullow Oil's 2009 half-yearly financial report, the early production scheme will provide important dynamic data and production operating experience.
"In the next phase, production from field developments in Block 2 (Kasamene) and Block 3 (Kingfisher) is expected to be delivered initially by truck and then by pipeline to a central gathering and distribution hub for onward transportation to regional markets," Tullow said.

The discovery of more oil has caused the Government to abandon the original early production scheme, meant to start later this year. Another reason for abandoning the project was the fall in international oil prices, which reduced the economic profitability of the initial scheme.
"It was, therefore, not economical to continue with the early production scheme and we said: why don't we plan for a bigger production?" Dozith Abeinomugisha, a senior geologist in the energy ministry, said.

Experts privy to the arrangements disclosed that other contentious issues delaying the project include marketing and pricing of the crude oil. The discovery of vast oil reserves in Uganda has caused excitement.
It has been confirmed that 2 bn barrels of commercial viable oil are underneath the Lake Albertine Graben. The discoveries can support production of over 100,000 barrels of oil per dayfor 20 years and are sufficient to implement large-scale refining in the country.

The Government wants crude oil refined locally to ensure a greater share of the profit remains here. It also wants to bring an end to the reliance on Kenyan ports for imported fuel.
Some of the oil will be used for power production but the bulk will be sold domestically and regionally. According to the Government plans, part of the revenue would be used for infrastructure and development projects, while part of it would be reserved to safeguard for future generations.