Uganda has picked three Nigerian companies and one from Australia for its oil exploration licensing round, inviting them to negotiate for production sharing agreements.

The country had announced its first competitive bidding round for six exploration blocks, covering a total of 3,000 square kilometres in February 2015. Bidding documents were issued to 16 oil firms but only seven submitted bids.

The Ministry of Energy and Mineral Development said it selected Nigerian firms WalterSmithPetroman Oil Limited, Oranto Petroleum International, Niger Delta Petroleum Resources and Australia’s Armour Energy Limited.

The four companies will negotiate for five production sharing agreements (PSAs) covering four blocks.

“Negotiation for these PSAs is the final milestone before granting exploration rights,” the ministry said in a statement. Issues for negotiation would include exploration work programmes and how the financial proceeds will be shared.

Crude oil reserves estimated by government geologists at 3.5 billion barrels were discovered in the Albertine rift basin along Uganda’s border with Democratic Republic of Congo (DRC) in 2006 but production has repeatedly been pushed back.

Spats over taxation, disagreements over field development strategies and delays in erecting infrastructure such as the export pipeline agreed with Tanzania in April have all been blamed. The jointly developed pipeline will carry Ugandan crude oil to Tanzania’s Indian Ocean port of Tanga for export.

The three oil firms already operating in Uganda, London-listed Tullow Oil, France’s Total and China’s CNOOC, did not participate in this bidding round.

 

Algeria

Algeria to boost gas transportation capacity by 18.3 Bcm/year

Algeria’s plans to link new fields to its gas hub at Hassi R’Mel have taken an important step forward with contracts signed for the construction of a new 9.4 Bcm/year pipeline that, together with another line currently being built, will boost Algeria’s internal gas transportation capacity by some 18.3 Bcm/year by 2019.

Algeria is trying to move to bring on gas production at new fields to make up for maturing output at its Hassi R’Mel field, though projects have been largely delayed.

Nonetheless, state-owned Sonatrach is pushing on with pipeline construction projects and has now signed contracts to build the 344-km GR7 line from El Menia to Hassi R’Mel in central Algeria.

Sonatrach said the GR7 pipeline would take 30 months to complete and would link new fields at Hassi Mouina, Hassi Ba Hamou and Ahnet to Hassi R’Mel.

The GR7 pipeline would enable an additional 9.4 Bcm/year of gas to be transported, Sonatrach said.

Another pipeline, the 765 km GR5 link, is currently being built to join up the Reggane field with Hassi R’Mel, which is expected to enter into operation in the first half of 2017. The GR5 pipeline can carry some 8.9 Bcm/year of gas, meaning that combined the two new links will add 18.3 Bcm/year to Algeria’s gas transportation capacity.

The pipelines are being built with plenty of spare capacity for future regional developments. According to the latest data from the Oxford Institute of Energy Studies (OIES), the four fields that will feed the new pipelines are expected to have plateau production of a combined 10.1 Bcm/year. Broken down, the plateau output levels are: Hassi Mouina (1.4 Bcm/year), Hassi Ba Hamou (1.8 Bcm/year), Ahnet (4 Bcm/year) and Reggane (2.9 Bcm/year).
The first three fields are being developed by Sonatrach alone, while Reggane is a development of Sonatrach in partnership with Spain’s Repsol, Russian-owned DEA and Italy’s Edison.

Concerns have been expressed over Algeria’s ability to raise gas output in order to both meet European import demand and growing domestic consumption.

Algeria’s commercial gas production slipped around the start of this decade, and fell again slightly in 2015 to 82.5 Bcm, according to official data from the Algerian energy ministry.

The OIES warned that gas production would stagnate “at best” and that with domestic demand growth, Algeria could be left with only 15 Bcm/year to export by 2030. This is, however, in contrast to Algeria’s own plans, which are to boost gas production by 30 percent from current levels by 2020.