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Uganda Starts Oil Drilling On First Commercial Project

Uganda has commenced drilling operations on its first commercially viable oil operation, a Uganda Ministry of Energy and Mineral Development spokesperson said on Tuesday.

The East African country said it had commissioned the first of four planned rigs in the discovery, and started drilling the country’s very first commercial well in hopes of reaching first production by 2025.

The Kingfisher oilfield in the Kikuube district is a CNOOC-operated field, but co-owned with TotalEnergies and Uganda’s state run oil company, UNOC. The project has suffered numerous delays after Uganda discovered the reserves almost 20 years ago. But a lack of pipeline infrastructure in the country has, until now, proved to be an insurmountable hurdle.

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The head of the state-run petroleum sector regulator Petroleum Authority of Uganda, Ernest Rubondo, described the progress on the fields as a “milestone in the journey toward the production of first oil in Uganda.”

Breakeven costs are expected to be $22 per barrel, with peak production expected at about 230,000 barrels per day.

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Construction will also start this year on the nearly 900-mile East Africa Crude Oil Pipeline, also planned by CNOOC and TotalEnergies, which has been described as the world’s longest heated oil pipeline. It, too, should be complete by 2025. Total holds a 62% stake in the pipeline project, with UNOC and CNOOC carrying 15% each.

The project has received pushback from EU’s parliament last year, which called for a maximum pressure campaign against the project on Ugandan authorities “to protect the environment and to put an end to the extractive activities in protected and sensitive ecosystems, including the shores of Lake Albert.”

Uganda is also looking to develop its refinery business, with a 60,000 bpd refinery expected to be built in Uganda’s mid-west, although has suffered numerous delays as well.

By Julianne Geiger for Oilprice.com

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