The government of Uganda through the Ministry of Energy and Mineral Development has signed a Production Sharing Agreement (PSA) for Petroleum Exploration, Development and Production with M/s DGR Energy Turaco Uganda SMC Limited.
The signed PSA also granted M/s DGR Energy Turaco Uganda SMC Limited the Petroleum Exploration License (PEL) for the Turaco Contract Area.
While signing on behalf of Uganda, the Minister of Energy, Ruth Nankabirwa said the signed agreement also marked a significant achievement of Uganda’s competitive Second Licensing Round for the oil and gas sector.
She noted that the agreement signed attests to the Government’s commitment to fulfilling the objectives and principles of the National Oil and Gas policy that provides for efficiency in licensing through open competitive bidding rounds.
“The implementation of the licensing round that was announced in May 2019 in Mombasa, Kenya at the 9th East African Petroleum Conference and Exhibition encountered a major challenge of the global Covid-19 Pandemic which affected the bidding and negotiation stages due to travel restrictions leading to the protracted implementation process of almost three and half years. We, therefore, appreciate the effort and commitment shown by UNOC that has been cooperative throughout the process, which shows their resilience and commitment to supporting the development of the oil and gas sector,” she said.
According to Nankabirwa, the agreement signed entails; A Petroleum Exploration License with an acreage of 635 sq. Kilometres, of four years exploration period split into two exploration periods of two years each.
“A minimum work programme which includes; reprocessing of existing 2D and 3D seismic data, Geological, Geochemical and Geophysical studies and 1 Firm well. An Advisory Committee chaired by the Petroleum Authority of Uganda, consisting of representatives from the Government and the Licensee to review and approve all annual exploration work programmes, budgets and production forecasts.”
According to the agreement, the Payment of Royalty will be based on the Gross Total Daily Production in Barrels of Oil Per Day with the rate of royalty for both PSAs ranging from 7.5 per cent to 20 per cent. Also, the Cost Recovery limit for both Cost Oil and Cost Gas has been set at 65 per cent each.
The agreement also shows that Production Sharing has been based on the R-Factor, which depends on the profitability of the project. Payment of a Signature Bonus will be amounting to US$ 100,000 to the Uganda Petroleum Fund while Payment of Research and Training fees per year will be amounting to USD 200,000 to the Uganda Petroleum Fund. Payment of Annual Acreage Rental fees for the First Exploration Period for the Turaco Contract Area will be USD 12,700 to the Uganda Petroleum Fund.
Nankabirwa again asserted that the Petroleum Exploration License that was awarded to DGRET in the Turaco Block was in accordance with Section 58 of the Petroleum (Exploration, Development and Production) Act, 2013. “This license marks a significant milestone for the competitive Second Licensing Round which my predecessor announced during May 2019 in Mombasa, Kenya.”
Nankabirwa also signed an Addendum to the Kanywataba PSA with M/S Armour Energy Uganda (SMC) Ltd. The Addendum will pave for the second renewal of the Exploration License for the Kanywataba Contract Area will expire on 28th May 2023.
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