The Prime Minister, Prof. Apollo Nsibambi says that the government through the Ministry of Energy and Mineral Development had placed a hold on issuing out licences to first ensure there is adequate legal regime in place.

Nsibambi was delivering an address on behalf of President Yoweri Museveni at the ongoing 5th East African Petroleum Conference and Exhibition (EAPCE’11) at Serena Hotel in Kampala.

He said the government had finalised the oil and gas policy, as well as fine turning legislation on handling of oil revenues which will ensure orderly prospecting, exploitation and development of Uganda’s oil and other natural resources.

oil drilling in western Uganda

The government, he says will in June 2011 advertise for bids from companies interested in prospecting for oil in different oil blocks identified by the government mineral surveys.

Uganda has confirmed commercially viable oil deposits in the Albeterine graben rift of mid western Uganda, and Tullow oil is working with the government to start commercial oil production.

The President said the East Africa Community member countries had agreed to jointly prospect and exploit their oil and gas resources.

He says that as Uganda prepares to construct an oil refinery, agreements have already been reached with EAC member countries Kenya Tanzania, Burundi and Rwanda to extend the oil pipeline there.

Museveni says although only Uganda has so far confirmed commercially viable oil deposits (about 2.5 billion barrels), oil exploration efforts in Kenya, Tanzania Burundi and Rwanda have intensified so that the five EAC countries can jointly exploit their resources.

The three day conference that has attracted oil and oil servicing companies and entrepreneurs from different parts of the world is being held under the theme: “Harnessing East Africa’s Oil and Gas Potential and utilizing the Resources to Create Lasting Value.”

Ultimate Media

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10 November 2010 – Tullow Oil plc (“Tullow”) issues the following Interim Management Statement, for the period 1 July to 9 November 2010, in accordance with reporting requirements of the EU Transparency Directive. The Group will announce its full year Trading Statement and Operational Update on 20 January 2011.

To date, in the second half of 2010, the Group has made excellent operational progress and financial performance is in line with expectations. The Owo-1 sidetrack has confirmed Owo as a major new light oil field offshore Ghana, potentially the largest in Africa since Jubilee, and contributed to a year-to-date exploration and appraisal success rate of 83% from 24 wells. The Jubilee Phase 1 development is on track for production to come on stream in December and 2010 working interest production is expected to average 58,000 boepd, at the top end of previous guidance. In addition, the Group continues to make progress in negotiations with the Government of Uganda to enable the planned farm-down to CNOOC and Total to proceed.

OPERATIONAL UPDATE

Ghana

Excellent progress has been made on the Jubilee development in the second half of 2010 including the commissioning, testing and final installation work on the FPSO and subsea systems and the completion of four development wells. First Oil from Jubilee Phase 1, a major milestone in the development of Ghana’s oil resources, is expected in early December and a ceremony hosted by the President of Ghana to mark this momentous occasion is scheduled for later in December 2010. Initial production capacity of around 50,000 bopd is expected to be delivered before year-end and production is expected to ramp up to 120,000 bopd over the next three to six months.

The Owo-1 and Owo-1 sidetrack wells, drilled in July and September respectively, confirmed Owo as a major new light oil field with a penetrated gross oil column of some 200 metres. A three well programme is planned to commence this month to appraise both the Owo oil discovery and the adjacent Tweneboa oil and gas condensate accumulations which will further refine the range of resources. Development studies for the Owo and Tweneboa fields have also begun with a view to development commencing in 2012.

In September, Kosmos Energy, the operator of the West Cape Three Points block submitted a Declaration of Commerciality to the Government of Ghana for the southeast Jubilee area. A Plan of Development is expected to be submitted in February 2011. Standalone and Jubilee tie-back options are currently under consideration.

In October, the Onyina-1 well was drilled in the Deepwater Tano licence to explore a high-risk prospect in a secondary Campanian play between the Tweneboa and Jubilee fields. It intersected good quality sandstone reservoirs however, they were water bearing at this location.

An exploration drilling campaign is scheduled to commence in the West Cape Three Points licence in December commencing with the Teak prospect.

In order to create a more accessible opportunity for Ghanaian individuals and institutions to invest in the future of their oil industry through Tullow, the Group is planning a secondary listing, and issuance of up to four million new shares, on the Ghana Stock Exchange.

Uganda

In the period since the beginning of July, five successful appraisal wells have been drilled in Uganda;  Nsoga-5, Ngiri-2, and three wells on the Kigogole field. The latest of these wells, Kigogole-4, was drilled over five km to the southeast of Kigogole-1. It encountered three zones containing 15 metres of oil bearing reservoir and found new pay in the basal sand section of the well. In addition, a material new discovery was made with the Mpoyo-1 well, taking the estimated P50 discovered resources to one billion barrels of oil. A high-impact exploration programme is now planned, and the two rigs in-country will be fully utilised once negotiations with the Government of Uganda have been concluded.

On 26 July 2010, Tullow acquired a 50% interest in Exploration Areas 1 and 3A in the Lake Albert Rift Basin from Heritage Oil and Gas Limited (“Heritage”). US$1.05 billion was paid directly to Heritage, US$121 million was deposited with the Ugandan Revenue Authority and US$283 million was put into Escrow pending resolution of a dispute between the Government of Uganda and Heritage over payment of capital gains tax.

Since then, Tullow and the Government of Uganda have been engaged in constructive discussions aimed at resolving this issue and progress has been made in recent weeks. Tullow’s aim is to align interests across the basin and accelerate development through a farm-down to CNOOC and Total, with each partner taking a one third interest. Conditional Government of Uganda approval has been received for the purchase and subsequent farm-down. However, the Government of Uganda has stated that final approval for both transactions will not be received until a basis for resolution of the Heritage capital gains tax dispute has been achieved. A Memorandum of Understanding is being prepared to pave the way for the farm-down and development of all assets within the Lake Albert rift basin by Tullow, Total and CNOOC.

Rest of Africa

Production performance from the African portfolio is in line with expectations, supported by strong performance from the Ceiba and Okume fields in Equatorial Guinea and the Niungo, Tchatamba and Onal fields in Gabon.

In Gabon, the Maroc Nord discovery where Tullow has a 7.5% interest is being appraised by a six-well programme. In total, four Exploration & Appraisal wells have been drilled so far, all successfully encountering oil.

Tullow’s non-operated two-well exploration campaign in Mauritania commenced in September with the Block 7 Pelican/Cormoran well which is targeting both appraisal and exploration objectives in the Cretaceous interval. Following the drilling of this well, the rig will move to Block 6 to drill the Gharabi prospect.

In the West African Equatorial Atlantic region, the Mercury-1 well, targeting a Jubilee-type prospect in Sierra-Leone commenced drilling in October. Plans are also under way to drill the high-impact Cobalt prospect in Liberia early next year.

In September, Tullow announced, pending relevant Government consents, the acquisition of a 50% operated interest in six contiguous licences covering the East African Rift Basins of Kenya and Ethiopia, an area of 97,000 sq km. This acreage shares many geological attributes with Tullow’s Lake Albert Rift Basin position in Uganda.

In Madagascar, geological field work has been successfully concluded. In addition to collecting samples of source rock, seals and reservoirs, good live light oil seeps were also discovered and sampled. This confirms the potential viability of these Rift Basin core plays

South America

Exploration activity in the Guyana Basin (Guyana, Suriname and French Guiana) continues. In French Guiana interpretation of the newly acquired 3D data set continues with the maturation of several Jubilee type prospects, the first and most exciting of which, Zaedyus, will be drilled in Q1 2011.

In September, Shell exercised its option, pending applicable Government approvals, to increase its interest in the Guyane Maritime block in French Guiana by 12% to 45%, which will result in Tullow having a 27.5% interest in the licence. Tullow is carried by both Shell and Total for the majority of the costs associated with the 3D seismic and the forthcoming Zaedyus exploration well.

In late September, Tullow signed a new deepwater license in Suriname (Block 47) and has initiated plans to acquire a 2,000 sq km 3D programme in 2011.

In Guyana, the Operator has secured a rig to drill the Jaguar prospect with an anticipated spud date of early Q2 2011.

Europe

Production performance in Europe has been very strong. Production has been enhanced following the successful implementation of a performance improvement initiative on the Schooner and Ketch fields, and the drilling of the Ketch-8z well which came in above expectations and ahead of budget.

South Asia

In Pakistan, the Shekhan-1 gas discovery well in the Kohat licence has been tested at over 15 mmscfd. An extended well test is planned to commence production late-2010 and a second exploration well is to spud around the same time. Tullow will begin the closure of the Sara/Suri field operations in November.

Performance from the Bangora field in Bangladesh has remained strong, producing consistently at the maximum rate of 120 mmscfd.

FINANCIAL UPDATE

Capital expenditure, as previously guided, is expected to be in the region of US$1.5 billion. In October, Tullow extended its revolving credit facility by US$350 million to US$600 million and now has total debt facilities of US$3.1 billion. Net Debt at 31 October 2010 was approximately US$1.9 billion.

OUTLOOK

First oil production from the Jubilee field is expected early next month and will transform Group production next year. An important appraisal programme to delineate the recently discovered Owo and Tweneboa fields commences shortly, and a major basin-opening exploration campaign across five countries in both Africa and South America is already under way. In addition, Tullow is nearing agreement with the Government of Uganda to allow the new partnership to embark upon an accelerated development of the Lake Albert Rift Basin. Overall, the outlook for the Group is very positive.

FOR FURTHER INFORMATION CONTACT:

Tullow Oil plc
(+44 20 8996 1000)

Ian Springett

Chris Perry

James Arnold

Citigate Dewe Rogerson
(+44 207 638 9571)
Martin Jackson

George Cazenove

Murray Consultants
(+353 1 498 0300)
Joe Murray

Ed Micheau

Notes to Editors

Tullow is a leading independent oil & gas, exploration and production group, quoted on the London and Irish Stock Exchanges (symbol: TLW) and is a constituent of the FTSE 100 Index. The Group has interests in over 85 exploration and production licences across 22 countries and focuses on four core areas: Africa, Europe, South Asia and South America.

In Africa, Tullow has production in Gabon, Côte d’Ivoire, Mauritania, Congo (Brazzaville) and Equatorial Guinea and two large appraisal and development programmes in Ghana and Uganda. Tullow also has exploration interests in Gabon, Côte d’Ivoire, Liberia, Sierra Leone, Mauritania, Senegal, Congo (DRC), Tanzania, Madagascar, Namibia and Angola.

Tullow’s European interests are primarily focused on gas in the UK Southern North Sea where it has significant interests in the Caister-Murdoch System and the Thames area. The company also has interests offshore the Netherlands.

In South Asia, Tullow has exploration and production in Bangladesh and exploration interests in Pakistan. In South America, Tullow has exploration interests in Guyana, French Guiana and Suriname.

The post Tullow Oil plc releases Interim Management Statement on its oil exploration first appeared on Uganda Multimedia News & Information.

oil drilling in western Uganda

Tullow announced today that the Ngiri-2 appraisal well, which is located in the Butiaba region of Uganda Block 1, has encountered over 40 metres of net oil bearing reservoir in two zones within an overall 131 metre gross oil bearing interval.

Angus McCoss, Tullow Exploration Director said the 40 metres of net oil pay in Ngiri-2 is the thickest oil pay so far encountered in the Butiaba area, demonstrating that after 32 successes in 33 wells the Lake Albert Rift Basin continues to deliver from the undrilled upside potential.

McCoss says Tullow’s exploration and appraisal campaign in Uganda has now discovered over 950 million barrels of oil (P50), with their estimate of the yet to find prospective resource at 1.5 billion barrels of oil (P50). “This continued success supports our planning for the accelerated basin-wide development with our future new partners Total and CNOOC.”

In a statement of Tuesday, Tullow said successful logging and sampling operations have confirmed the presence of moveable oil in two zones.

“The lower zone encountered an oil water contact while pressure data acquired within the upper zone indicates the possibility of a deeper contact than expected. Reservoir quality is also excellent, akin to the Kasamene field in Block 2, where a production rate of 3,500 bopd was achieved during testing in 2009,” Tullow said in a statement.

The well was drilled 1.7 km north of the Ngiri-1 discovery well (drilled on the Warthog prospect) to a total depth of 892 metres.
The Ngiri-2 well was the first of a multi-well appraisal programme planned to further evaluate the extent and recovery potential of the Ngiri field. Tullow oil says further activities will take place in 4Q 2010 with the drilling of down-dip appraisal wells Ngiri-3 and Ngiri-4 designed to establish oil water contacts and reservoir distribution.

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Tullow operates its 100% interests in three licences, Blocks 1, 2 and 3A, in the Lake Albert Rift Basin in Uganda.

By Ultimate Media

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A row between the government of Uganda and a British Heritage Oil Company over taxes has deepened with the Uganda Energy and minerals minister insisting that Heritage Oil Company must pay taxes to receive an endorsement from the Uganda government over the sale of its Western Uganda oil wells to Tullow Company.

Uganda oil exploration

Heritage Oil Company signed a sale and purchase agreement in January 2010 with Tullow Oil Company. Under the agreement, Tullow oil will aquire 50 percent of the shares in the Heritage oil Company oil exploration blocks.

Uganda Minister Onek says Heritage Oil Company must pay taxes to enable the people of Uganda benefit from their oil resource.

Heritage Oil company has gone to ahead to petition the Uganda government to the United Nations for arbitration over the tax dispute with the government of Uganda.

According to the Uganda laws, the oil company is supposed to pay 30 percent taxes to the Uganda government.

The deal is worth US dollars 1.5 billion and the Uganda government is expected to get US dollars 108 million representing 30 percent of the total sale.

In his state of the Union address early this month (June 2010), Uganda President, Yoweri Museveni insisted that Heritage Oil Company will have to pay taxes resulting from the sale of the oil wells to the Uganda government.

The row has stalled investments of over US Dollars 10 billion from China’s CNOOC and France’s Total oil companies in drilling, transportation and processing Uganda recently discovered oil.

The row might also delay oil drilling which was expected to start in 2011 risking making Uganda continuously dependant on expensive oil imports to fuel its economy.

By Solomon Akugizibwe, Ultimate Media

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