Uganda unveils first commercial oil production drilling programme

The East African country discovered commercial reserves of petroleum nearly two decades ago but production has been repeatedly postponed over a lack of infrastructure such as a pipeline. The ceremony to launch the rig and the start of drilling programme of production wells was held at a site in the Kingfisher project area in Kikuube district on the shores of Lake Albert in the west of Uganda.

Uganda on Tuesday commissioned the first of its four planned oil rigs and the start of drilling the first production well, a key milestone as the country races to meet its target of first oil output in 2025 after a long delay. The East African country discovered commercial reserves of petroleum nearly two decades ago but production has been repeatedly postponed over a lack of infrastructure such as a pipeline.

The ceremony to launch the rig and the start of drilling programme of production wells was held at a site in the Kingfisher project area in Kikuube district on the shores of Lake Albert in the west of Uganda. Kingfisher is one of Uganda's two commercial oil development projects and is operated by China's CNOOC.

The second project area, Tilenga, is operated by France's TotalEnergies. Ernest Rubondo, head of the state-run petroleum sector regulator Petroleum Authority of Uganda (PAU) said CNOOC had launched the drilling campaign less than one year after the final investment decision was taken for Uganda's oil fields, describing it as a "milestone in the journey toward the production of first oil in Uganda."

Government critics and activists have said pumping and transportation of crude will lead to widespread displacement and endanger the environment. On Tuesday, the police blocked two prominent opposition figures in Uganda from attending a seminar in Kampala where they were key speakers on a discussion about the risks of Uganda's oil, Kizza Besigye, one of the opposition leaders, told Reuters.

"There is no doubt that countries that have exploited oil when their governance is poor, that oil has become a curse," Besigye said. Investments in developing the Kingfisher project is expected to total about $2 billion and once production starts the oilfield is expected to earn Uganda about $6.9 billion at current crude prices over the entire lifetime of the resource, Rubondo said.

The cost of producing oil from Kingfisher is about 22 dollars per barrel, which Rubondo said "compares very well with the international average of about 30 dollars per barrel." CNOOC and TotalEnergies co-own Uganda's existing oilfields alongside the state-run Uganda National Oil Company (UNOC).

At peak production, Uganda plans to produce about 230,000 barrels of crude oil per day. (Additional Reporting by Justin Dralaze; Editing by George Obulutsa, Rashmi Aich, Bhargav Acharya and Jane Merriman)

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