The oil sector regulator, Petroleum Authority of Uganda (PAU, has said it approved $428m (Shs1.5 trillion) as the total budget for the year ending for the five oil companies licensed to operate in Uganda.
Ernest Rubondo, the PAU executive director, said the $428m is an increase by $200m (Shs735b) which was approved in 2017.
“The companies are supposed to undertake Final Investment Decision (FID) in 2019 and we expect the costs and budget to increase to $1b (Shs1.5t),” he said.
PAU is mandated to review annual work plans and budgets by oil companies at the beginning of every year.
The approved work plans and budgets including salaries and contracts and sub-contracts form the basis for the oil companies to submit recoverable cost reports to the Auditor General for further scrutiny and compilation.
For example, according to the audited costs by the Auditor General for the Production Sharing Agreements, the government owes oil companies $935m (Shs3.4 trillion) out of the $1b (Shs3.7 trillion) which was claimed. Some $81.147m (Shs300b) was disallowed as “costs not recoverable.”
Expenditure
Out of the $428m, Mr Rubondo said, $6m (Shs22b) was incurred by two new companies – Autralia’s Armour Energy and Nigeria’s Oranto Petroleum – which were licenced last year and are in the exploration phase including undertaking more seismic data on the oil fields.
The rest – $422m (Shs1.5 trillion) – Mr Rubondo said was spent by the joint venture partners – Total E&P, Tullow Oil and CNOOC on the three exploration areas of EA1, EA2 and EA3, where they, previously, jointly commanded 33.33 shareholding.
Enegry minister Irene Muloni told journalists yesterday they expected CNOOC to make Final Investment Decision for the Kingfisher Field by April 2019. The field is expected to pump first oil. Production licence for Kingfisher was awarded first in September 2013 and since then the company has been undertaking the requisite studies to inform construction of facilities for pumping oil.
CNOOC, the operator of the field, finalised the technical Front End Engineering Designs (FEED) for Kingfisher last year and has been under review.