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Uganda has launched its first drilling rig to develop the Kingfisher oil field. On Jan. 24 first four oil rigs were commissioned. Starting drilling is a pivot point for  the country that is planning to get first oil output in 2025 after a long delay.

▪️The Kingfisher project is expected to boost Uganda’s oil industry, which still has to import oil from other countries, according to the local Daily monitor newspaper.

▪️Following the Kingfisher field, located south of Lake Albert, drilling is planned to begin in the Tilenga area north of the lake. Commercial oil production is expected in 2025.

▪️In February 2022, TotalEnergies and China’s CNOOC announced the signing of an investment agreement to implement a $10 billion oil project in Uganda. Head of the state-run petroleum sector regulator Petroleum Authority of Uganda (PAU) Ernest Rubondo said CNOOC managed to start drilling campaign less than one year after the final investment decision was taken for Uganda’s oil fields,

▪️Also planned is the construction of the East African Oil Pipeline in Uganda and Tanzania, 1,444 km long, worth $4.2 billion, which will help the country become a major oil exporter. Oil will be transported to the port of Tanga in Tanzania. In addition, Uganda intends to build an oil refinery with a capacity of 60,000 bpd.

▪️Uganda studied different oil field exploration projects back in 2006, but the implementation has been repeatedly postponed due to regulatory and infrastructure restrictions. Uganda’s oil reserves are estimated at 6.5 billion barrels, of which 1.4 billion barrels are recoverable. In the future, Uganda intends to produce about 230 thousand barrels of oil per day.

🔺 How much will Uganda earn?

The cost of local oil is about 22 dollars per barrel, whereas the international average of about 30 dollars per barrel. So Kingfisher project has very good potential.

To put this project into operation about $2 billion is needed. In total Uganda is expected to earn about $6.9 billion for the entire lifetime of the project. This number could easily fluctuate up or down depending on the current market situation. That’s not much. But for Uganda and some African countries investing in oil fields is the last chance to earn something before green transition and gradual ban on fossil fuels.