M a r k e t N e w s

Oil & gas landmarks-Key milestones were reached

Posted on : Monday, 22nd December 2014

 Dogged by a myriad of obstacles since commercially viable quantities of oil and gas were first announced in 2006, the oil and gas sector registered several milestones this year than it possibly did in the first six years of discovery. Just a month into 2014, the government agreed with the three oil companies, Tullow Oil Uganda, Total E&P and the Chinese National Offshore Oil Corporation (CNOOC) on the Field Development Plan paving way for production. The landmark agreement with the government effectively charted the course for Uganda’s downstream oil industry operations.

 
At the start of 2014, only two of the three pieces of legislation deemed necessary to govern the country’s oil and gas sector had been enacted into law.
 
Although the Petroleum (Exploration, Development and Production) Act became law in April 2013, and the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act was enacted in July 2013, the third piece of legislation dragged on until November. On Nov. 27, the Revenue Management Bill was finally passed into law.   In July, nominees for board membership of the institutions—the National Petroleum Authority and the National Oil Company (NOC)—were submitted to the Parliamentary Appointments Committee for vetting.
 
All of them were approved except the National Petroleum Authority nominee chairperson, Immaculate Ssemanda Nakimera who MPs objected to citing, ‘incompetence.’ The nominee chairperson for the influential NOC, Emmanuel Katongole, was approved.  But, probably the biggest news in the sector came on Aug. 28 when for the second year running; the government revised upwards the country’s petroleum resources by over 85% to about 6.5 billion barrels of oil up from 3.5 billion barrels of oil which the government announced last year.
 
In addition, about 500 billion cubic feet of non-associated gas (independent gas) is also now estimated to have been discovered in Uganda to date.
 
Of the 21 discoveries that have so far been made, the three companies—CNOOC, Total E&P Uganda and Tullow Oil—have now submitted applications for production licences for 13 discoveries whose appraisal is now complete.
 
In June, the government shortlisted two bidders - SK Group of South Korea, and RT Global Resources of Russian - for the role of lead investor for the 60,000 bpd refinery and related infrastructure.
 
The winner will be announced by February 2015 following a postponement from December 2014.  The year also saw the government and Tullow locked in negotiations at the Tax Appeals Tribunal over a Capital Gains Tax dispute, which arose after the oil company after it sold its interests in Uganda’s oil sector, valued at $ 2.9b, to CNOOC and Total in 2012. That issue was eventually settled in July when Tullow Oil was ordered to pay $407m to the Uganda Revenue Authority.
 

Source : the independent
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