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Will Crude Hit $120 Again?

Will Crude Hit $120 Again?

A number of bullish factors…

Uganda Seeks $500M From China To Jumpstart Oil Production

Uganda has requested a loan of more than US$500 million from China’s Export–Import (EXIM) Bank that it would use to build roads in its oil belt in view of a plan to begin oil production by 2020, local media reported on Thursday, quoting Uganda’s finance minister.

It is true we put in the request and discussions are ongoing; to see how they can help us,” Finance Minister Matia Kasaija told Uganga’s newspaper Daily Monitor. “It is a matter of prioritising, and we have made it clear that these roads are much needed to help us get oil out of the ground,” Kasaija told the local daily.

Uganda does not produce oil now, but plans to start pumping crude in 2020. The first commercial oil discovery in Uganda was made in the Albertine Graben area in 2006. Since then, well appraisals have boosted Uganda’s proved crude oil reserves from zero in 2010 to 2.5 billion barrels as of the end of 2015. The Ugandan government says that the Albertine Graben area contains 6.5 billion barrels of oil in place.

But the production start date, now set for 2020, has been pushed back several times due to contractual and tax disputes, disagreements over the export routes, and how much international oil companies would export. Lack of adequate and sufficient infrastructure, as well as the low oil prices, has also been delaying some plans.

China’s CNOOC, France’s Total, and London-listed Tullow Oil are the international companies leading the exploration efforts in Uganda.

Related: Despite Promises To Cut, Iraq Raises February Oil Exports

According to estimates by the country’s energy ministry – reported by Daily Monitor – the oil companies are expected to invest up to US$8 billion in the next phase of development that would lead to the first oil production. This would come on top of other infrastructure such as the US$3.5-billion crude export pipeline to Tanzania, and a US$4-billion refinery.

Earlier this year, Total raised its stake in Uganda’s oil development, buying 64.71 percent of Tullow Oil’s interests in several exploration areas for US$900 million, which has left Tullow Oil with an 11.76-percent interest in the project.   

By Tsvetana Paraskova for Oilprice.com

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