Uganda to Start Oil-Production Tests at Lake Albert This Year

Uganda will begin production tests at its Lake Albert oil fields in September, part of a longer-range program aimed at building a refinery that will begin operating within three years, the Energy Ministry said.

The testing will involve “simulating production” to determine the reservoir’s performance and volumes, and to provide guidance for procurement of necessary equipment, Robert Kasende, an assistant commissioner at the ministry, said in an interview today in the capital, Kampala.

The east African nation will initially build a small refinery with a capacity of 20,000 barrels of oil a day in the first three years at a cost of $700 million, said Kasende. Daily production will rise to 60,000 barrels in five years, with the cost climbing to $2 billion, he said.

Tullow Oil Plc (TLW), the U.K. explorer that discovered commercially viable oil deposits in the Lake Albert basin in 2006 and will lead the production testing, has formed a partnership with Total SA (FP) of France and China National Offshore Oil Corp. to build a refinery. Uganda has an estimated 2.5 billion barrels of oil, with more than 1 billion already discovered, according to Tullow.

The nation is “still discussing” financing options for the refinery with the three companies, as well as with “many others,” Kasende said.

To contact the reporter on this story: Fred Ojambo in Kampala via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.

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