Cnooc of China Wins Uganda’s First Oil Production License

China National Offshore Oil Corp. won a $2 billion production license in Uganda, the first to be approved by the African nation as it seeks to tap reserves discovered seven years ago.

Cnooc will develop the Kingfisher area in the Albertine region over four years, Peter Lokeris, Uganda’s minister of state for mineral development, said today in the capital, Kampala. The area is estimated to hold 635 million barrels, of which 196 million barrels are recoverable.

Uganda, classified as one of the world’s poorest nations by the World Bank, is finally on the verge of an oil boom after crude was found in 2006. The country, with sub-Saharan Africa’s fourth-biggest oil reserves, plans to feed some of the crude to a planned refinery, enabling a reduction in energy imports.

Kingfisher will pump 30,000 barrels to 40,000 barrels a day, the minister said. He expects 40 development wells and a 50-kilometer (30-mile) pipeline to the new refinery, due for completion by 2018. The plant will have an initial capacity of 30,000 barrels a day, which may later double, Lokeris said.

The development of Kingfisher will also result in the production of gas, which will be used in power plants, Lokeris said, without elaborating.

The Kingfisher area is jointly owned by Beijing-based Cnooc, Tullow Oil Plc and France’s Total SA. Landlocked Uganda is also negotiating with oil companies to build a pipe to the Kenyan port of Lamu, Lokeris said. President Yoweri Museveni and his Kenyan counterpart Uhuru Kenyatta agreed to develop the link in June, saying it would also have a loop to South Sudan.

The Ugandan government will have a 15 percent interest in the Kingfisher area as soon as production starts, the minister said. The country has sub-Saharan Africa’s biggest oil reserves after Nigeria, Angola and South Sudan, according to the International Monetary Fund.

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