Nigeria’s Oranto awarded license for Ngassa field

Energy minister Irene Muloni (L) and Oranto Petroleum chairman Arthur Eze displaying a copy of one of the agreements. Credit: Uganda Business News

Uganda has signed two production sharing agreements (PSAs) with Nigeria’s Oranto Petroleum and also issued two exploration licenses for the Ngassa oil block.

Oranto, founded by Nigerian tycoon Arthur Eze, is one of the four firms that were shortlisted in the competitive licensing round opened by the energy ministry in 2015. A total of seventeen bidders had initially expressed interest in the six oil blocks that were up for licensing.

However, two companies dropped out leaving Oranto and Armour Energy, an Australian oil junior which was licenced last month.

Oranto has operations in, among other countries, Liberia, Namibia, São Tomé and Príncipe, and South Sudan.

The company’s chief legal officer, Nj Ayuk, said they were going to invest “massively” in Uganda and “live up to expectations.”

Oranto’s exploration licence and PSA were earlier scheduled to be issued and signed in June but the exercise was called off to conduct further due diligence on the company.

Robert Kasande, the permanent secretary at the ministry of energy, said the due diligence covered the company’s technical and financial competences and sought “to understand whether it can match up to the requirements.”

“The Ngassa Play comprises 410 square kilometres of shallow and deepwater acreage in Lake Albert, contiguous to major coastal petroleum discoveries,” Oranto said in a statement. “The PSA comprises a first exploration period of two years followed by a second exploration period for a maximum of two years for both licenses.

“Each first exploration period carries a minimum work program which includes undertaking 2D and 3D seismic shooting and reprocessing and amplitude versus offset (AVO) studies. Following the first exploration period, Oranto has the option to renew the agreement and commence a second exploration period consisting of additional seismic data acquisition, the drilling of one exploration well and the drilling of one appraisal well contingent upon the success of the first well.”

The government has signed two PSAs for each of the shallow and deep areas of the block. The royalty rate for both PSAs ranges from 5.5% to 18%.

Other terms include a $2.4m performance guarantee, payment of a signature bonus, together with research and training fees, and annual acreage rental fees for the first exploration period amounting to $1.8m (Shs6bn).