KAMPALA Jan 24 Uganda has completed
negotiations with Britain's Tullow Oil and its partners
and will soon sign an agreement that could pave the way for the
start of crude production.
East Africa's third-largest economy struck hydrocarbon
deposits in the Albertine rift basin but commercial production
has been delayed and is not expected until 2016 at the earliest.
In a speech at a private function for Tullow late on
Thursday and seen by Reuters on Friday, energy minister Irene
Muloni said the government would shortly sign the memorandum of
understanding (MoU) with Tullow and its partners, France's Total
and China's CNOOC.
Developing Uganda's oil fields and building the required
infrastructure would cost between $15 billion and $22 billion,
although there were plans to try to reduce that, Muloni said.
"Negotiations about this MoU are now fully complete and we
anticipate its signing very soon. This is a significant
milestone since the market framework is critical for the
commitment of project financing," she said.
Muloni did not say when the signing would take place.
The pact will detail the facilities required to be put in
place, such as pipelines and a refinery, the roles of the
different parties, and the flow rates for oil fields before
actual production can start.
Uganda, which has 3.5 billion barrels worth of crude
reserves, has agreed with oil firms to both a medium scale
domestic refinery and a pipeline connecting to Kenya's
newly-built Indian Ocean port of Lamu to export excess crude.
The refinery is to start with a small processing capacity of
30,000 barrels per day but is expected to be scaled up and
capped at 60,000 barrels.
Tullow has previously said Uganda could earn about $50
billion from its oil resource over the fields' production life,
estimated to be several years.
(Editing by James Macharia and Mark Potter)