EXPLORER TULLOW Oil has said it could end up producing more than twice as much oil as expected in Uganda in the coming years if the right development plan is adopted.
Tullow chief executive Aidan Heavey said output from the Ugandan side of the Albertine basin could ultimately be well ahead of the current target of 150,000 barrels per day (bpd) in three years.
“When the basin is on full production we feel at this stage we’re probably talking about 350,000 bpd,” said Mr Heavey.
Tullow shares were up 1.99 per cent to 1,233p by mid-afternoon yesterday on the news, against a 0.3 drop in the DJ Stoxx European oil and gas sector index.
A Tullow spokesman said the 350,000 bpd reflected the potential of the Ugandan fields and would take at least five years to reach. The company retains its 150,000 bpd target.
This target is based on Tullow’s initial development review. Since then the company has found more oil and investors have been hoping the target might be raised.
The government and the parties involved in Uganda’s nascent oil industry have yet to agree a development plan for the fields, which executives believe contain billions of barrels of oil.
A pipeline will need to be built to move crude to the Kenyan coast for export to markets around the world.
The government is also interested in having a refinery built, which could result in the export of oil products to regional neighbours.
The exact plan for the field will determine the final output level, the Tullow spokesman said.
London- and Dublin-listed Tullow has agreed a sale for partner Heritage Oil’s 50 per cent stake in two promising Ugandan exploration areas, and plans to sell on some of the assets to another partner who will help with the construction of the refinery and export pipeline.
Mr Heavey said he may choose both China’s CNOOC and France’s Total as partners. “The investment is going to be huge. You are talking about multiple billions of dollars of investments. The only two companies that are currently in the final process are CNOOC and Total. It would be good if both were involved.”
The Ugandan government said this week the country would require $8 billion (€5.9 billion) to develop the oil industry.
Tullow and Heritage control three oil blocks that cover the Ugandan side of Lake Albert, but they lack the technical and financial resources to develop the project by themselves. – (Reuters)
