Page 8 - AfrOil Week 16 2020
P. 8
AfrOil INVESTMENT AfrOil
“[Owing] to COVID-19, we have again extended the date for submission of applica- tions in the prequalification stage to September 30,” Mugisha said. “COVID-19 has significantly affected the oil industry in all aspects, and the crude oil price is now less than $30 per barrel.”
The spread of the pandemic has affected global energy demand and oil prices to such a degree that Kampala does not expect inter- national oil companies (IOCs) to pursue new projects.
Under current conditions, he asserted, IOCs are more concerned with stabilising their finances than with new acquisitions.
Uncertainty about the duration of the public health crisis is also a key consideration in the short term, Mugisha added. “We cannot tell when the situation will normalise, and therefore companies cannot make commitments,” he said.
He also stated, though, that Ugandan authorities were hoping to avoid further delays. Assuming that oil markets start to normalise in the second half of the year, Ugandan assets should look more attractive to potential inves- tors by September, he said.
Kampala has postponed the second licensing round several times. It had originally hoped to wrap up bidding in 2019 but then decided that it could not conclude the pre-qualification stage before March 2020 or conclude negotiations with the winners of the tenders.
The bidding round covers five blocks – Avivi, Kasuruban, Ngaji, Omuka and Turaco. All of these sites are located in the western part of the country, near Lake Albert. Other fields in the region appear to contain about 6bn barrels of oil in place (OIP), including 1.4bn barrels in recov- erable reserves.
The second bidding round covers five onshore fields (Image: Uganda Ministry of Energy)
PERFORMANCE
Ugandan central bank official sees low oil prices delaying production
UGANDA
A representative of Uganda’s central bank said last week that the country’s nascent oil industry was likely to suffer as a result of the collapse in global crude prices.
Adam Mugume, the acting deputy gover- nor of the Bank of Uganda, described current market conditions as unfavourable. Uganda had hoped to sell its crude for at least $40-45 per barrel, and world prices are far below this level, he noted.
“If the international oil prices remain in the range of $30 per barrel, is it profitable for private
sector investment and Uganda as a whole to continue investing? The payback becomes con- strained,”hesaidduringawebinarorganisedby Stanbic Bank. (The webinar took place several days before front-month contracts for WTI, the main US benchmark crude, began trading below zero.)
According to Mugume, who also serves as
the central bank’s executive director of research, Uganda and its foreign partners will not be able
to meet deadlines for starting oil production at
fields near Lake Albert.
P8
w w w . N E W S B A S E . c o m Week 16 22•April•2020
