On Friday, the Ugandan government approved a pivotal two-year extension to Oranto Petroleum Limited (OPL) for their exploration licenses in the Ngassa Deep and Ngassa Shallow Contract Areas. This extension marks a strategic move empowering OPL to engage in comprehensive exploration and appraisal drilling activities, subject to the success of the exploration well.
The genesis of this extension traces back to 2017 when OPL initially clinched petroleum exploration licenses for the Ngassa Deep and Ngassa Shallow contract areas. The endorsement of this extension by the Minister of Energy and Mineral Development, Hon. Ruth Nankabirwa Ssentamu, underscores the government’s encouragement for OPL to optimise this added timeframe for a successful outcome.
Hon. Nankabirwa underscored the extension’s significance, emphasizing its potential to significantly bolster Uganda’s oil reserves. Presently, Uganda boasts 6 billion barrels of oil in place, with 1.4 billion barrels deemed recoverable.
“We have robust legal frameworks in place, and adherence to these laws is crucial for the benefit of all stakeholders and the nation at large,” emphasized Hon. Nankabirwa. “While differing opinions about fossil fuels persist, our commitment to responsibly develop our oil and gas resources remains steadfast. We are determined to illuminate Uganda, transitioning from traditional cooking methods to cleaner alternatives like LPG (Liquified Petroleum Gas).”
The Minister also highlighted Uganda’s recent launch of the Energy Transition Plan during the UN COP28 Climate Change Summit in Dubai, UAE, affirming that petroleum funds will play a pivotal role in facilitating this transformation. “Proceeds from petroleum resources will support Uganda’s energy transition plan, with all oil revenue directed toward infrastructure development.”
Expressing gratitude for the extension, Mr. Abdul Byakagaba, General Manager of OPL, assured strict adherence to the stipulated work program within the allocated two-year timeframe.
The Ngassa Block, situated in the Hoima District within the Albertine Graben, remains a focal point of exploration.
Permanent Secretary Ms Irene Bateebe lauded OPL for the agreement, confirming meticulous review by the Ministry’s technical team before obtaining clearance from the Attorney General.
The journey began in 2017 when OPL initially acquired two-year licenses for exploration in the Ngassa Shallow and Deep Play areas, extending until 2021. However, disruptions caused by COVID-19 led to a force majeure clause invocation, prompting OPL to request compensation for lost days in 2021. The government sanctioned this extension, effective from December 30, 2021, to December 29, 2023.
Subsequently, on July 25, 2023, OPL submitted a request for a three-year license extension and renegotiation of the Production Sharing Agreement (PSA) terms for the Ngassa Block. The Minister responded on September 22, 2023, clarifying that current legislation allows a maximum two-year license extension, contingent upon PSA amendment for the Ngassa Block.
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