Oil Contracts in Uganda

From Oil4All
Jump to: navigation, search

The production sharing agreements (PSAs) Uganda's government has signed with international oil companies have not been made public.[1]


UK organization PLATFORM obtained copies of the PSAs for Block 3A (signed in 2004) between Uganda and Heritage Oil, which included a comparison with the terms of the PSAs covering Block 1 and Block 2. The group also sourced the PSA for Dominion Petroleum Company's Block 4B, and a draft of Tullow Oil's Block 2 PSA. According to PLATFORM, internal figures modeled by the government indicated that pursuant to these contracts the state would receive 67.5% to 74.2% of total oil revenue. An analysis by Credit Suisse of the PSA signed with Heritage Oil predicted government take of between 55% and 67%. PLATFORM's own assessment indicated that the government would receive between 47.4% and 79.5% of revenues, depending on the price of oil, size of fields, development costs and other factors, noting that the highest figures would only be achieved if the government took up the possible 15% state participation. PLATFORM criticized these contracts in its report Ugandaʼs contracts – a bad deal made worse, noting that these figures were all below the 80% or bigger government take regularly touted by both the Ugandan government and the international oil companies in Uganda.[2]

Tullow's 2012 contracts

Several of the contracts which figure in the PLATFORM analysis, however, were superseded when Tullow signed new PSAs with the government in February 2012 for Exploration Area 1 and the Kanywataba licence area, and was also awarded a production licence for the Kingfisher oil field.[2] In reference to these contracts, Oil in Uganda wrote in November 2012 that "it seems very likely that the government obtained better terms in the new PSA", suggesting that Tullow made concessions because it needed the agreement in order to proceed with farm-down agreements to bring in Total S.A. and CNOOC as partners in its contract areas. The site wrote that the PSA is believed to include the provision that up to 60% of recoverable reserves in the licensed areas can be counted as "cost oil," meaning that over half the value of the resource would go back to the companies to cover their investment in extracting it. The remaining "profit oil" would then be divided between government and companies, and the site wrote that it was widely believed that the government would get 60 percent of the profit and the companies 40 percent.[1]


  1. 1.0 1.1 "It’s all about money! Ten key questions on oil revenue", Oil in Uganda, 8 November 2012.
  2. 2.0 2.1 "Ugandaʼs contracts – a bad deal made worse", PLATFORM, retrieved 8 January 2012.