KAMPALA, Feb. 6 (Xinhua) -- The Ugandan government has signed an agreement with foreign oil companies to activate the commercial production of crude oil in the East African country, an official said Thursday.
The agreement, signed with French companies Total, the China National Offshore Oil Corporation (CNOOC) and British company Tullow, was a landmark document, Uganda's Minister of Energy and Mineral Development Irene Muloni said.
"This has been a major milestone because everyone has been eager and keen to know when the first oil is going to come out of the ground. All Ugandans are very keen to partake of that resource," Muloni said.
The pact includes the use of crude oil for power generation, supply of crude oil to a refinery and export of crude oil through a pipeline.
Muloni said generation of power was critical to the development of the country, noting that by 2015 the demand for power would have outstripped the current supply.
"Every other year we have additional demand of not less than 10 percent, meaning that every year we must have new sources of electricity generation to make sure that we meet the demand," she said.
"We are planning to make sure we use some of this crude to fill that gap," she added.
The construction of the refinery is expected to enhance Uganda's oil generation capacity, with a total of 60,000 barrels of oil produced per day.
The oil will be exported through a pipeline to Kenya's port of Lamu since Uganda is landlocked.
Muloni said that the refinery would have the priority to get the crude oil produced.
She said six firms have been shortlisted to submit proposals for the development of the refinery and among the six, one will be selected as a leading investor.
"By mid-2014, we should have selected the leading investor that is going to join hands with the government in developing and constructing this refinery," she said.
The Uganda government was acquiring 29 square kilometers of land in Albertine Graben in western Uganda, where the refinery will be located near the oil wells.
Muloni said that the oil companies would be granted production licenses if they comply with the government requirement.
"I wish to emphasize that the government is ensuring that the processes leading up to the development and production of the discovered resources are handled efficiently and effectively, in line with our national oil and gas policy," Muloni said.
