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Total Sees Progress With Uganda on Lake Albert Oil Development

Total SA (FP), along with partners Tullow Oil Plc (TLW) and China National Offshore Oil Corp., have yet to reach an agreement with Uganda on a billion-dollar oilfield development in the Lake Albert Basin.

“It’s not completely finalized,” Yves-Louis Darricarrere, Total’s head of exploration and production, said in an interview in Oslo. “A lot of progress has been made,” including in talks with Ugandan President Yoweri Museveni, he said.

The sticking point between the oil companies and Ugandan authorities remains the potential size of a refinery that would be developed to process crude from the East African nation, he said.

The French executive spoke after Museveni’s office said April 15 that Cnooc and Total had agreed to build a 30,000- barrel-per-day refinery, an increase from previous plans to start with a 20,000 barrel-per-day facility. Uganda favors upgrading the refinery to a daily capacity of 60,000 barrels because of growing demand, though oil companies are opposed to the expansion, according to the government.

“In order for the project to be developed and financed there has to be a crude export pipeline,” Darricarre said. “We are in agreement to build a refinery, but one that will supply the local needs of Uganda. The rest should be exported. We haven’t been able to agree with Ugandan authorities on this.”

Total has said the three partners may spend as much as $14 billion to develop the oilfields. Work could begin next year and production could start by the end of 2017.

Uganda’s oilfields are estimated to hold 3.5 billion barrels of crude. Total, Tullow and Cnooc hold equal stakes in oil blocks EA-1, EA-1A, EA-2 and Kingfisher in the Lake Albertine region near the border with the Democratic Republic of Congo. The partners are negotiating with the government to build an export pipeline to Kenya’s coastal city of Mombasa as well as the refinery.

Getting agreement on the crude-processing plant “is essential for us to move ahead,” Darricarrere said.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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