KAMPALA, March 18– Uganda will use the revenue from its newly discovered petroleum resources to modernise the country’s agricultural sector, says Energy and Mineral Development Minister Irene Muloni.
Agriculture is the mainstay of Uganda’s economy in terms of growth and poverty reduction and the sector employs more than three quarters of the country’s population, the majority of whom are in rural areas.
This makes the performance of the sector critically important for a pro-poor pattern of development. However, the agricultural sector has not received the financial support it deserves because of budgetary constraints, affecting its performance.
“However, with the discovery of oil and gas resources, Uganda hopes that a big chunk of the oil proceeds will finance the modernisation of agriculture,” said Muloni when addressing a conference in the United States.
“Uganda is an agricultural country and we will use the revenues from this natural resource to create lasting value through the upgrading of our infrastructure, mechanising agriculture, increasing access to energy for the population and protecting our environment,” she told the annual Energy Executive Conference in Houston, Texas, last week.
Uganda has proven petroleum resources currently estimated at 3.5 billion barrels of oil in place. The discovery was made in 2006 in the Albertine Graben. According to World Bank estimates, Uganda could earn up to 3.0 billion US dollars from oil benefits and if well managed, it has the potential to transform Uganda’s economic and social progress.
Muloni noted that it is an exciting time for Uganda where the finding cost for oil is 1.0 USD per barrel which is one of the lowest in the world. “This, coupled with a drilling success rate of above 85 per cent, makes Uganda an attractive destination for investment,” she added.
Worldwide, the drilling success rate averages between 10 and 20 per cent.
The Government recently signed a Memorandum of Understanding with the licensed oil companies operating in the country on the commercialisation plan for the discovered petroleum resources in the Albertine Graben.
“We are in the process of developing a 60,000 barrels per day refinery through a public-private partnership and the selection of a lead investor to partner with the Government is underway and will be completed mid-2014.”
Three oil companies — Tullow, Total and CNOOC — are currently licensed to undertake oil exploration with China’s CNOOC already having a production licence.
The Ugandan Parliament recently passed two pieces of legislation that among other things, provide for licensing through open competitive bidding and the establishment of a regulatory institution and a National Oil Company.
“Recoverable resources stand at 1.7 billion barrels from only 40% of the area with potential. Licensing rounds for unlicensed acreage, starting with areas that have good data coverage will be held in 2014/15. The potential for additional resources in the country is a reality,” Muloni explained.
The government has prioritised areas such as reviving old irrigation schemes, constructing water harvesting facilities and expediting rural electrification. Uganda’s oil and gas policy goal is to use the oil resources to contribute to the early reduction of poverty and improve society’s welfare.
SOURCE: NEW VISION