Tuesday, January 13, 2009

Major Oil Find in Uganda

From Reuters:
British oil explorers Heritage Oil Plc and Tullow Oil Plc said on Tuesday they had made a potentially "world class" oil discovery in Uganda.

Reserves found by the Giraffe-1 well in the Lake Albert Rift Basin and linked discovery Buffalo, which was announced in December, could total more than 400 million barrels of oil, the two companies said in separate statements.

Heritage plans to do more drilling in Block 1 later this year and it could take two to three years to uncover the full potential of the basin, Atherton said.

"Combined with our other finds in the region, we have now clearly exceeded the thresholds for basin development," Tullow Chief Executive Aidan Heavey said. "Options for commercialisation and first oil production are currently being fast-tracked."

Arnstein at Jefferies International said Tullow and Heritage had needed to show Buffalo-Giraffe was able to produce at least 400 million barrels of oil to help them justify the cost of building a $1.5 billion, 1,300 km-long (806 mile) heated pipeline to carry the oil over mountainous and swampy land to Ugandan capital Kampala and the Kenyan coast.

RBC Capital Markets said that although further drilling was needed to reduce the risks inherent in Buffalo-Giraffe, "with 1 billion (barrels worth) of oil-in-place potential, today's result is significant."
Theoretically, this should be good news, but the history of resource boons in Africa has been almost uniformly negative--with the exception, of course, of Botswana. Generally, the elites in government who control access to the resource get rich while the locals suffer from pollution and displacement and receive little if any compensation. In addition, the oil discovery appears to be very close to the border between Uganda and Congo, which could become a source of tension. More to come as this story develops.

Paul Collier says that Uganda's discovery of oil "is in just about the most disastrous place on earth." See about the 6:15 mark of his TED presentation. I'm not sure whether he means the discovery will be disastrous for the region (which is what I first assumed), or simply that the discovery is located in one of the world's most disastrous places.

No comments:

Post a Comment