Play by Play: Albertine Graben

The Lake Albert basin, also known as the Albertine Graben, is the most explored play in East Africa Rift System. It lies on the western border of Uganda and the eastern border of the Democratic Republic of the Congo. The Albertine Graben has been a source of interest for investors since the Ugandan oil discovery in 2006.

The presence of oil seeps in the Lake Albert basin has been known for decades, reportedly even before British scientists documented them in 1920. Still, there has been little interest in exploring this land-locked region. The rift area occupies around 9,000 square kilometers, being on average 40 kilometers across and 200 kilometers long, and is flanked by geological elevations on both sides, rising up to 400 meters in the Ugandan side, and up to 1,100 meters in the Congolese blue mountains.

Two junior companies, Hardman Resources and Heritage Oil, started undertaking seismic studies in the late 1990s and moved on to drilling in the early 2000s on the Eastern shore of Lake Albert. In June 2006, Hardman Resources, in partnership with Tullow Oil, drilled the Mputa-1 well, striking oil for the first time in Ugandan history and bringing the country into the international spotlight.

The Nzizi, Waraga and Mputa discoveries are now under appraisal. In the north area of the block, the Ngege, Kasamene, Kigogole, Wairindi, Ngara and Nsoga finds followed. In general, these discoveries have yielded fairly light waxy oil, with an average API of 30 degrees, and a low gas-oil ratio. The Ugandan basin had, until very recently, been divided in 17 different exploration zones situated within blocks 1, 2, 3A, 3B, 3C, 3D, 4A, 4B and 5, with blocks 2 and 3A covering almost all of Ugandan’s territorial waters of Lake Albert. Block 1 is located at the very North of Lake Albert, bordering Block 5, which follows the rift up to the Uganda border with Sudan. Block 4A and 4B, so far unexplored, cover Lake George and the Ugandan half of lake Edward, both considered to also hold potential for hydrocarbons discoveries.

Because of the unprecedented interest, the Ugandan government set a moratorium on further exploration and production licenses in the country until 2012, to allow the country to prepare for the development of an oil and gas industry and consider the logistical challenges. More than a decade after the first discovery, production has yet to start. A series of acquisitions has led to an elite group composed of Tullow Oil, Total and CNOOC, with each owning 33% of blocks 1, 2 and 3A, monopolizing the industry. However, in a recent farm-down deal still subject to approval by the Ugandan government, Tullow Oil is to transfer 21.57% of its 33.33% interest in Exploration Areas 1, 1A, 2 and 3A in Uganda to Total and also transfer operatorship of Block 2 to Total. The latest government estimates indicate reserves of crude oil in each of the three blocks at 6.5 billion barrels, with recoverable oil between 1.8 billion and 2.2 billion barrels.

As operator of Block 3A, CNOOC received its licenses for development in 2013. Tullow and Total were granted permission to start production in late 2016. Still, construction of an export pipeline remains mandatory for commercialization of the discoveries. The three companies have stated their intension to develop the three blocks under a common production network structure to benefit from economies of scale and optimize profitability. However, the collapse in the oil and gas price and the delays in the development of infrastructure has diminished interest. A bidding round in 2016 saw mild interest from the industry, with three blocks being taken by four junior companies, one from Australia and three from Nigeria.

The Congolese side of the Albertine Graben is divided into five blocks. Blocks 1 and 2 cover the Congolese side of Lake Albert and are held by two South African companies, Caprikat & Foxwhelp. To the south, Block 3 is held by Total, but the company has since stated that it will not proceed with exploration due to security concerns in the area.

On the Congolese side of Lake Edward, Block 4 is currently held by an American-Canadian joint venture, Albatroz Oil DRC, and Block 5 is operated by London-based Soco International. The Congolese acreage has seen no prospecting activity, despite the first production sharing agreement dating back to 2002.