Kampala — The Uganda National Oil Company (Unoc) yesterday signed a memorandum of understanding with Chinese oil major, China National Offshore Oil Corporation (Cnooc), on joint oil exploration and development of oil fields in Uganda's oil belt in the Albertine graben.
The agreement was signed between the Unoc chief executive, Dr Josephine Wapakabulo, and Cnooc president Fang Zhi in Beijing, China.
President Museveni, Foreign Affairs minister Sam Kutesa and Attorney General William Byaruhanga witnessed the signing ceremony.
Sources in Beijing told Daily Monitor that the "idea is to quickly start exploration in any identified area and to support the projected production profile of the areas under development," which will expose Unoc to exploration work and prepare it to become an operator in the future.
Mandate
Unoc is the statutory body charged with handling Uganda's commercial interests in the oil sector.
Besides handling commercial interests and related aspects of state participation, Unoc is also mandated to investigate and propose new upstream, midstream and downstream ventures both locally and internationally under which the agreement falls.
Currently, Unoc oversees the government's 15 per cent stake in the nine production licences for the oil fields operated by the international oil companies --Total E&P, Cnooc, and Anglo-Irish Tullow Oil.
The capital expenditure for developing the oil fields is estimated at $6.7b (about Shs24 trillion) but Unoc' stake, including investment, is being borne by the oil companies until the body gains financial muscle.
The Unoc-Cnooc agreement comes on backdrop of upcoming competitive licensing round for three oil blocks, Taitai and Karuka in Buliisa District, Mvule in Yumbe/ Moyo districts and Ngaji in Kanungu and Rukungiri districts, which sources said will be announced officially in November.
Under the new agreement, sources said, Unoc will invoke section 53 of the Petroleum (Exploration, Development and Production) Act, 2013, which allows the Energy minister, in exceptional circumstances, in consultation with the sector regulator--Petroleum Authority-- to receive direct applications for petroleum exploration licences.
The Act states that the exceptional circumstances include where invitations for bids have been sent out three times and no application has been received; where the application is in respect of a reservoir within a licensed block which extends into an unlicensed block; or enhancement of the participating interest of the state in the promotion of national interest.
Meanwhile, President Museveni is today expected to conclude his four-day state visit to China where he attended the 7th Forum on China-Africa Cooperation (FOCAC) under the theme: 'Toward an Even Stronger Community with a Shared Future through Win-Win Co-operation.'
The FOCAC summit ended on Tuesday.
