Uganda is set to sign on Thursday two oil production sharing agreements with a Nigerian firm, enabling the company to begin exploration work, the government said on Wednesday.

The firm, Oranto Petroleum International, was among a number of companies that bid in the country’s first competitive oil exploration licensing round last year, with two other Nigerian firms and Australia’s Armour Energy also getting through to final negotiations for the award of the PSAs.

The ministry of energy and mineral development said the deal with Oranto covers the Ngassa Shallow Play and Ngassa Deep Play exploration blocks located near the southern part of Lake Albert.

Uganda discovered oil in 2006 in the Albertine rift basin along its border with the Democratic Republic of Congo.

Gross crude reserves are estimated by government geologists at 6.5 billion barrels of which between 1.4 to 1.7 billion barrels are considered recoverable. Production is expected to start in 2020.

The first batch of licences that Uganda awarded in the early 2000s were given on a first-come, first-served basis.

But after the discovery of commercially recoverable reserves the country enacted new laws to manage the sector and under those laws exploration licences must be granted on a competitive basis. (Reuters)