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Total Exploration and Production Uganda Ltd., a unit of Total SA (TOT) is planning to spend at least $300 million on exploration and appraisal activities in its two exploration areas in Uganda this year, a company executive said Friday.
In a presentation to a Ugandan parliamentary panel, Loic Laurandel, the Total E&P Uganda general manager said that the funds would be invested in drilling at least seven oil wells in one of its blocks, Exploration area one.
"A very intensive appraisal program is being carried out in order to maximize the potential of the block," he said.
In February, Total completed the long-delayed deal to acquire one-third interest in Blocks 1, 2 and 3A in Uganda's Lake Albertine Rift basin, previously held by London-listed Tullow Oil PLC (TLW.LN), for $1.46 billion.
These blocks have since been divided to create five blocks among which is Exploration area one.
Laurandel told Ugandan lawmakers that the company has now stepped up efforts to develop the country's oil fields, through partnership with Tullow and China's Cnooc Ltd. (CEO)
"Total and its partners are working on an ambitious development program on the five blocks," he said. "The investment costs of such global development should exceed $10 billion for the upstream part only, most of this amount being spent by 2017."
The company will also appraise at least three oil fields in Exploration area one before the commencement of oil production, which is slated to start later this year, in a phased manner reaching full-scale output by 2017.
Laurandel further told lawmakers that the three companies' stakes in the blocks would be reduced from the current 100% to 85% once the government effects its rights to acquire a 15% stake in the oil fields.
"Government has already indicated that it intends to exercise its right and acquire a 15% stake, starting with the Kingfisher oil field," he said.
Kingfisher is located in block 3A near the border with mineral-rich but restive Eastern Congo.
According to Peter Lokeris, Uganda's junior energy and minerals minister, the government's stakes will be managed by the National Oil Company, which is expected to be established this year.
Cnooc operates block 3A and the Kingfisher oil fields, located at the Southern tip of Lake Albert while Tullow is now operating block 2 which straddles Uganda's Hoima and Bulisa districts.
At least 1.5 billion barrels of oil have so far been confirmed in the explored area and geologists estimate that this could rise to as much as 6 billion barrels with more exploration activities.
Dow Jones Newswires
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