KAMPALA – The Ugandan government has approved a two-year extension of exploration licenses to Oranto Petroleum Limited (OPL) for the Ngassa Deep and Ngassa Shallow Contract Areas. This extension will enable OPL to conduct both exploration and appraisal drilling activities, contingent upon the success of the exploration well.
In 2017, OPL was initially awarded petroleum exploration licenses for the Ngassa Deep and Ngassa Shallow contract areas. The Minister of Energy and Mineral Development, Hon. Ruth Nankabirwa Ssentamu, endorsed the extension and urged OPL to make the most of the additional time granted to achieve a successful outcome.
Nankabirwa emphasised the significance of this extension, highlighting its potential contribution to increasing Uganda’s oil reserves. Currently, Uganda possesses 6 billion barrels of oil in place, with 1.4 billion barrels deemed recoverable.
“We have a robust legal framework in place, and adherence to these laws is essential for the benefit of all stakeholders and the nation as a whole,” stated Nankabirwa.
“While there may be opposing forces regarding fossil fuels, we must remain committed to responsibly developing our oil and gas resources. We aim to bring light to Uganda, transitioning from traditional cooking methods to cleaner alternatives like LPG (Liquified Petroleum Gas).”
The Minister also noted the recent launch of Uganda’s Energy Transition Plan during the UN COP28 Climate Change Summit in Dubai, UAE, underlining that petroleum funds will be crucial in facilitating this transition. She stated, “Proceeds from petroleum resources will be channelled into supporting Uganda’s efforts to achieve its energy transition plan, and all proceeds from oil will go to infrastructure development.”
Mr Abdul Byakagaba, the General Manager of OPL, expressed gratitude for the extension and assured that the company would adhere to the work program within the stipulated twoyear timeframe.
The Ngassa Block is in the Hoima District and spans the Albertine Graben.
Permanent Secretary Ms Irene Bateebe commended OPL for the agreement and confirmed that the Ministry’s technical team had meticulously reviewed all aspects of the extension before obtaining clearance from the Attorney General.
In 2017, OPL initially obtained two-year licenses for exploration in the Ngassa Shallow and Deep Play areas in Hoima and Kikuube districts. These licenses were renewed in 2019, extending them until 2021. Due to disruptions caused by COVID-19 and invoking a force majeure clause, OPL requested compensation for the days lost in 2021. The government approved this extension, effective from December 30, 2021, to December 29, 2023.
On July 25, 2023, OPL submitted a request to the Minister for a three-year license extension and renegotiation of the Production Sharing Agreement (PSA) terms for the Ngassa Block. These terms encompass royalties, cost recovery, and profit sharing. However, in a response dated September 22, 2023, the Minister clarified that current legislation allows for a maximum two-year license extension, not three, contingent upon the amendment of the PSA for the Ngassa Block.
