Indigenous Firms Want Ugandan Acreage

International oil firms are not the only ones waiting for Uganda to launch a licensing round, indigenous firms want their shot at gaining acreage also. According to the East African’ country’s Ministry of Energy and Mineral Development, Ugandan companies are lining up to bid for oil exploration licenses once the government finally irons out some issues.

At least seven Ugandan firms have so far expressed interest in exploration, refinery development, and other services. These are: Asker Investments Ltd, Canaan Investments Ltd., TRC Group, Nile Valley Oil Exploration Plc, Saipem (U) Ltd, Schenker Oil and Gas Services Ltd. and Intex Construction.

"The ministry urges them to participate, in the future licensing rounds that would be launched once the new regulatory framework for the sector is in place," a report from the ministry reads.

Uganda still has roughly 14,000 sq km of unlicensed acreage and companies have expressed an interest in gaining access. There has also been an unprecedented amount of interest in Uganda’s sure to grow midstream and downstream sector.

There has been some concern expressed over any indigenous firm having the capabilities and as a result are not being taken too seriously, even by the energy ministry. Bukenya Matovu, the minister of Energy and Mineral Development's spokesperson told The Observer, "Yes, they have just expressed interest to apply for exploration acreage, but we are yet to take them serious."

Matovu told The Observer that the upstream and midstream activities in Uganda's oil industry require heavy financial investment and highly-skilled technical ability, which Ugandan companies might not have. "Do you believe that there is a Ugandan company with capacity to undertake oil exploration? They are just frontline companies," Matovu said.

He went on to say that some of these companies might be incorporated here, but shareholders might not be Ugandans. Alternatively, Matovu reasons, some companies want to use their influence, acquire exploration licenses and sell their interests to competent multinational companies, for a profit (something that has happened in other African countries).

Fresh acreage is expected to go on the auction block next year following the passage of two petroleum bills into law. The two bills are currently in parliament and were thought to be ready for passage in the coming month however, recent reports out of Uganda have a struggle growing between President Yoweri Museveni and the parliament over proposed ministerial powers in the country’s upstream oil bill. Law makers rejected Museveni’s attempts to reinstate section 9 of the bill, which grants the minister sole powers of approving, granting, and revoking oil licenses. At the outset of November the section was amended allowing such functions to be primarily discharged by the Petroleum Authority, a statutory body that regulates the sector.

The law makers also cut back on the minister's powers to "ensure accountability and transparency," according to Wilfred Niwagaba, a ruling party law maker. "Any attempt to reintroduce section 9 would change the entire bill…this is the future of Uganda if we are to avoid the oil curse," Niwagaba said.

Source: Petroleum Africa