Value of Uganda oilfields rises as Zuma joins race

from the east african

Posted Monday, September 27 2010 at 16:11

After turning the tables on Tullow Oil in Congo with a $9 million signature bonus to the Democratic Republic of Congo government, South African President Jacob Zuma’s nephew Khulubuse Zuma’s men have landed in Uganda — sending tremors throughout the oil industry as the country prepares a new round of licensing for Exploration Area 3A, which is home to proven oil reserves.

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However, whether the country will benefit from the anticipated intensified jockeying for its oil wealth is a moot point.

As things stand, with the new oil and gas policy that has been under discussion for the past two years yet to become law, much still depends on the whims of individuals in the government.

“There is really no firm policy over how the new licensing round is going to be handled or how Tullow will fare in all this; as the energy minister has said, a way forward is yet to be decided,” said a source at the Petroleum Exploration and Production Department.

No officials were available to confirm or dispute reports doing the rounds in Kampala that as much as $1 billion has been offered to Uganda in signature bonuses by Medea Development SA, the oil company associated with Mr Zuma.

Buzz
The buzz over Uganda’s oilfields follows the expiry of the exploration licence for Block 3A that stretches from the southeastern banks of Lake Albert to the country’s border with the DR Congo.

Uncertainty also continues over the fate of the Kingfisher Well that Tullow Oil recently bought for $1.5 billion but lost in August after it failed to apply for a production licence within stipulated time limits.

The licence for Block 3A expired on September 7, radically changing the game and threatening to tear apart alliances that had begun to coalesce around Tullow Oil, which was primed to farm out two-thirds of its interests to partners.

Although industry experts put the fair value of signature bonuses for Block 3, which is home to the 200 million-barrel Kingfisher Well, at $100 million, figures ranging from $250 million to $1 billion are being bandied about.

For Uganda, which has received a paltry $1 million in signature bonuses from all prospectors, this would be a quantum leap.

According to a report on Uganda’s petroleum exploration by UK-based advocacy group Platform, in comparison, the DR Congo received $3.5 million in signature bonuses for Block 1A, which borders Uganda, in 2008.

More recently, Medea Development confirmed that it had paid $9 million, before the DR Congo government threw out Tullow and gave the fields to Medea last July.

Uganda low earnings from signature bonuses so far are attributed to the fact that, in the beginning, the government negotiated directly with the oil prospectors and did not earn any money in the first rounds.

It was suggested recently that any subsequent licensing for oil exploration would be subject to bidding but the legal framework for this policy intention is not in place.

While the Kingfisher Well has tended to dominate any discussions about Uganda’s oil find, insiders suggest that the newcomers are looking beyond that, especially at three other prospects in Block 3 that promise to yield more oil than Kingfisher.

VVS,

RETHINK YOUR THINKING AND READ THROUGH THE LINES AGAIN . UGANDA IS NOT KENYA( WHERE YOU CAME FROM ) NOR NIGERIA THAT I AM WRITING FROM.

IS THAT NOT OUTSIDE THE BOX (YOUR COUNTRY ) ???

Wallmart is buying Massmart for $4 BIL...ofcourse the Massmart shares have surged 12% today on the JSE....

Hong Kong shares declined due to profit-taking Tuesday, after the Hang Sang Index had ended higher in 11 out of the past 12 sessions for a cumulative gain of 5.9%.

The blue-chip Hang Seng Index fell 230.89 points, or 1.0%, to 22,109.95 after trading between 22,091.13 and 22,371.60. The closing level was near the intraday low.

Market volume totaled HK$78.93 billion, slightly below Monday's HK$81.89 billion.

Still, analysts said they expect the market to rise further in the coming months after a near-term consolidation, with the blue-chip index likely to reach 25,000 points by the end of the year. They said rotational buying into smaller companies will likely emerge given the earlier gains in blue chips.

'The blue chips, as represented by the Hang Seng Index, may consolidate in the short term. I expect rotational buying into the second liners,' said Castor Pang, a research director at Cinda International.

He said he favored non-blue-chip Hong Kong banks such as Wing Hang Bank, as well as China consumer-related businesses. Wing Hang Bank rose 1.2% to HK$94.35 Tuesday.

China Unicom was the worst-performing blue chip, falling 4.3% to HK$11.20 after saying it sold US$1.839 billion worth of convertible bonds to replenish its working capital and support the construction of its broadband and third-generation mobile networks.

'The fund-raising exercise reveals that China Unicom faces cash-flow pressure,' Kim Eng Securities said in a note. It added the company's launch of the iPhone 4 had boosted the company's share price, but the market is now concerned about '3G subscriber acquisition and profitability.'

Television Broadcasts ended 5.8% lower at HK$43.80, after rising 17% in pre-open trading Monday on speculation its controlling shareholder was up for sale. TVB suspended trading in its shares before regular trading started Monday and later confirmed its controlling shareholder is in preliminary talks on its sale.

Deutsche Bank said in a note that if the potential investors pay a premium the controlling stake, that price 'might not be reflected in the share price of the stock in the secondary market unless there is a general offer.'

Bucking the broader index's decline, Chalco rose 4.3% to HK$7.32 after its parent company, Chinalco, said it is investing CNY10 billion to develop rare-earth resources in China's Jiangxi province.

GOME Electrical Appliances rose 4.6% to HK$2.49 ahead of a vote on motions put forward by the company's jailed founder Huang Guangyu, which include removing current GOME Chairman Chen Xiao. GOME's management has vowed to maintain the stability of the company's operations regardless of the results.

China Medical System continued the recent trend of strong debuts by new listings, ending at HK$5.64, up 11.5% from its IPO price of HK$5.06.

Amid the stabilized US stock market, together with quarter end window dressing effect as well as future expiry effect, local market performed well on Wednesday. Although A share market retreated slightly, it does not impose much pressure on HK stock market. The Hang Seng Index rose 269 points to 22,379 while H share index added 249 points to 12,429. Market turnover rose to HK$85.4bn, reflecting strong market condition. The recently listed Boshiwa(1698.HK) opened 53% higher at HK7.6 and still finished at HK$7.02, 41% above IPO price. Besides, auto companies are also chasing target with Dongfeng (0489.HK) and Brilliance China (1114.HK) rose 8% and 9% each.