Uganda announces it will issue new oil exploration licenses in the next fiscal year

The finance minister announced on Wednesday that Uganda will issue new oil exploration licenses during the fiscal year 2025/2026, which runs from July to June. This is to boost investment in the sector as well as the overall economic growth.

Early last year, the last licensing round for this east African nation launched in 2019 ended. The country awarded the final two blocks of the five offered.

Matia Kasaija, in a speech outlining the priorities for Uganda in the financial year 2025/2026, said that "accelerating investment in oil and natural gas will play a key role in contributing to faster economic growth in Uganda next year."

He said that in order to achieve greater investments and growth overall, the government will issue more exploration licenses.

Uganda is planning to begin commercial oil production next year in the Albertine Graben Basin in the west of the country.

Only about 40% of Graben has so far been explored, and an estimated 6.5 billion gallons of oil were found.

The majority shareholder of the fields is France's TotalEnergies with a stake of 56.7%. Other partners include China's CNOOC, and Uganda's state-run National Oil Company UNOC.

Kasaija said that Uganda's debt burden remained "sustainable" despite the downgrades of credit ratings by rating agencies. He stated that the country is committed to keeping its debt-to-GDP ratio below 50%.

Fitch downgraded Uganda's credit rating from B+ to B in late August. The reason given was "reduced accessibility to concessional finance, high domestic borrowing rates and a decrease in foreign exchange reserves."

Fitch's decision follows Moody's, which downgraded Uganda's credit rating from B2 to B3 in May. Moody's cited Uganda's "diminished affordability of debt." (Reporting and editing by Elias Biryabarema, Editing by George Obulutsa, Editing by Ros Russel)

(source: Reuters)