Directorate of Petroleum

1st LICENSING ROUND - Uganda’s Licensing Round Applicants Represent Right Blend of Oil Companies.

  • Uganda’s Licensing Round Applicants Represent Right Blend of Oil Companies.

    Uganda’s Licensing Round Applicants Represent Right Blend of Oil Companies.

    Uganda’s first competitive licensing round has attracted the right blend of companies required for exploration, development and production of any additional oil and gas resources in the country. 

    Petroleum exploration and production companies can be grouped into small, medium, large and major companies using the following market capitalization thresholds:-

    • small if the market cap is less than $5billion;
    • medium if the market cap is between $5bn and $25bn;
    • large if the market cap is above $25bn;and 
    • major if the market capitalization is over $100billion

    Currently, Uganda has a blend of companies which include one major, Total whose market capitalization is just over $110.00billion, one large company, CNOOC whose market capitalization is close to $60.00billion and a small company, Tullow Oil with a market capitalization of about $4.00billion.

    Regarding the companies which have expressed interest to participate in the country’s first competitive licensing round, two of the 17 companies are large companies; five are medium sized companies while the others can be considered to be small companies. 

    The licensing round has therefore attracted different sizes of companies which is a desirable phenomenon for the industry especially given the unique advantages of each category of companies. The small and medium Exploration and Production companies are known to be good at undertaking exploration especially during the early stage when exploration risk is high; they are also more adaptive, collaborative, nimble, focused and innovative. The majors and large companies on the other hand have all the necessary capital and expertise and often buy off small companies that have made discoveries before or during development and production work. 

    The aspect of small to mid-sized companies undertaking exploration and subsequently being replaced by large oil companies is an established process in the oil and gas industry worldwide. Companies which start small do also grow as they progressively expand their market capitalization usually through successful exploration. The absence of majors in the applicants for Uganda’s first licensing round is therefore not a measure of the success of the round neither does it disadvantage the eminent expansion of the oil and gas sector in  the country. The gradual and phased licensing of the areas with the potential for petroleum production in the country as recommended in the National Oil and Gas Policy of 2008 will indeed continue to facilitate entry and participation of the desirable industry players and hence ensure sustainable creation of value from the country’s oil and gas resources.

    Peninah Aheebwa

    Ag. Principal Petroleum Officer

    Petroleum Directorate, Ministry of Energy and Mineral Development