History of Uganda's Extractive Industries

According to Uganda's Petroleum Exploration and Production Department website, an oil seepage near Kibiro on the shores of Lake Albert, in the country's west, has long been known to the indigenous people who lived in the area. But the first formal evaluation of the country’s hydrocarbon potential was by government geologist EJ Wayland, who documented hydrocarbon occurrences in the Albertine Graben in the 1920s.

The areas on the eastern shore of Lake Albert were the site of wildcat drilling in the 1930s, but war and political instability precluded major exploration activities in Uganda from the second world war until the early 1980s. Between 1983 and 1992, geologists carried out aeromagnetic surveys of the entire Albertine Graben region and identified five sedimentary basins in the country: the Albertine Graben (the most promising basin), the Lake Kyoga basin, the Hoima basin, the Lake Wamala basin and the Moroto-Kadam basin.

In 1985 the government enacted the Petroleum (Exploration and Production) Act to regulate oil activity in Uganda.

=Licensing and Exploration= The government signed its first production sharing agreement (PSA) with Fina Exploration Uganda in 1991 for a contract area which covered the entire Albertine Graben. In the same year, the new Petroleum Exploration and Production Department (PEPD) initiated ground geological and geophysical surveys in areas identified by the aeromagnetic data, and used the acquired data to subdivide the Albertine Graben into nine smaller exploration areas and began to promote these areas for investment.

Fina's PSA expired in 1993, without any major exploration work taking place; and in 1997 the government licensed Exploration Area 3 (Semliki Basin) to Heritage Oil and Gas, which the following year acquired the first 2-D seismic data in Uganda of a strip of land 170 kilometers long.

The government granted several licenses in the following years: in 2001 Hardman Resources and Energy Africa acquired a license for Exploration Area 2 (Northern Lake Albert Basin); Heritage and Energy Africa, which was bought by Tullow Oil in May 2004, acquired licenses to Exploration Area 1 in July of that year and in September, Exploration Area 3A (Semliki basin) was relicensed to Heritage and Energy Africa. In 2005 the government granted Neptune Petroleum (Tower Resources) a license for Exploration Area 5 (The Rhino Camp Basin); and in 2007 the government licensed Dominion Petroleum to Exploration Area 4B (Lakes Edward and George Basin).

The Mputa-1 well in the Kaiso-Tonya area, drilled by Hardman and Energy Africa, became Uganda's first discovery well in 2005.

=New legislation and downstream strategies= In 2008 the government passed the National Oil and Gas Policy, with the stated goal of "[using] the country’s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society." Research fellow Dr. Jason Hickel at the London School of Economics called the framework "a surprisingly progressive document". The government began drafting a Petroleum Bill in 2009, which finally passed in December 2012.

Between 2010 and 2012, the government undertook several studies to develop the oil sector, including: a national content study to evaluate the role of local Ugandan workers in the industry; a feasibility study on oil refining in Uganda, and petroleum transportation studies for crude oil and its products.