UPDATE 1-Uganda to sign memo with oil firms over production-ministry

Thu Feb 6, 2014 1:10am EST

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KAMPALA Feb 6 (Reuters) - Uganda will sign a memorandum of understanding on Thursday with Britain's Tullow Oil, France's Total and China's CNOOC, an Energy Ministry spokesman said, in a vital step towards starting oil production in the country

East Africa's third-largest economy struck hydrocarbon deposits in 2006 but commercial production has been delayed and is not expected to start until 2016 at the earliest. Analysts blame the delay on negotiations over a planned refinery.

The pact is expected to detail facilities that need to be put in place, such as pipelines and a refinery, and flow rates for oil fields, before actual production can start.

"It's the signing of the MoU between the Ugandan government and the three oil companies," ministry spokesman Bukenya-Matovu Yusuf told Reuters, after the ministry issued an invitation to a news conference.

Energy Minister Irene Muloni said last month that developing Uganda's oil fields and building infrastructure would cost between $15 billion and $22 billion, although there were plans to try to reduce that.

Uganda has agreed to build a pipeline that will run to Kenya's planned new Indian Ocean port of Lamu, which is expected to become an export terminal for crude from Uganda, Kenya and other regional states.

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