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Tullow Oil next month plans to start new drilling operations in Uganda, where its sees potential for up to two billion barrels from its concessions, an executive said on Wednesday.
The British-based oil and gas exploration group will drill four wells initially at Butiaba, in the Lake Albert Basin, where Tullow has already found oil in eight wells, Tullow's general manager for Uganda, Brian Glover, told Reuters in a interview.
"We are going to start drilling in Butiaba at the beginning of April," Glover said. "The success rate has been very high. We hope to see the same in Butiaba." "Butiaba has a one billion barrel upside potential," he added, saying that up to nine wells would have to be drilled to yield that amount of oil.
The British firm has three concessions in the Albertine Basin, which it believes could double its worldwide reserves. It holds two of the blocks in partnership with Canada's Heritage Oil
"In a very high case, it could be up to 2 billion barrels," Glover said when asked what the overall potential was for Tullow's Ugandan prospects. Tullow's 2007 annual report highlighted that its African assets, mainly in Uganda and Ghana, had transformed its business and that appraising the Lake Albert Basin would be a priority for 2008.
Last year Tullow made its largest ever discovery - the Jubilee field offshore Ghana. Glover said the company, which is due to begin pumping oil in 2009, would invest over $200 million in Ugandan operations this year alone. The company was forced to suspend exploration at the Ngassa-1 well in Block 2 in February due to borehole instability but Tullow said it would drill from another location.
The discovery of oil in Uganda has prompted concern as well as excited in a region richly endowed with natural resources but plagued by a series of wars and continuing instability. Last year saw a string of clashes between Congolese and Ugandan soldiers when a border dispute erupted between the two countries on Lake Albert.
In one incident, a British contractor from Heritage Oil was killed while carrying out a seismic survey. Security sources say officials from the two countries - which during the last decade have fought a war, largely over resources in Congo - are in the process of clarifying the border.
Tullow is also trying to secure rights to two oil-producing blocks on the Congolese side of Lake Albert. The company signed an agreement with the government in 2006 but the contracts are being challenged. Tullow estimates it will pump some 4,000 barrels per day once production begins in Uganda.
Some of the oil produced will be sent to a power production plant in Uganda that will operate on crude, heavy fuel oil and diesel, Glover said. Due to be up and running by 2010, Glover said the plant will be managed by Jacobsen Elektro and have a production capacity of 57 megawatts (MW) of electricity, 50MW of which would be sent to the Ugandan grid while the company would use the rest. Uganda, like many African countries, is struggling to meet growing power demands and many have no access to electricity while those connected face long blackouts.

Copyright Reuters, 2008

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