UPDATE: Rig Shortage Delays Ugandan Oil Drilling, Appraisals

A shortage of drilling rigs is hampering appraisals and drilling activities in oil fields in Uganda's Block 2 and Block 4B, the senior geologist at the petroleum exploration and production department said Friday.

Dozith Abeinomugisha said appraisals in Block 2, which were supposed to begin at the start of February, were delayed by the lack of rigs.

Block 2 is 100% owned and operated by U.K.-based Tullow Oil PLC (TLW.LN).

"In Block 4, drilling locations have been identified but the company is not able to drill them now due to the lack of drills," he said. Block 4 is licensed to Dominion Petroleum Ltd. (DPL.LN)

Early this month, London-listed Tower Resources Ltd. (TRP.LN) delayed drilling a second well after Tullow Oil failed to deliver in time a rig that it had been using at its Kasemene fields.

Abeinomugisha said only three wells have been drilled in Block 2, where the largest oil field in the country has been discovered. The government is evaluating the development proposal submitted by Tullow in Block 1, where development is expected to start by the middle of this year, he added.

The government is also vetting development plans submitted by China National Offshore Oil Corp. (0883.HK) and Total SA (TOT) over their proposed partnership with Tullow to develop Uganda's oil fields. A decision is expected in March.

A Tullow Oil spokesman said appraisals in Block 2 would resume in April and remain on schedule. Drilling activities in Block 1, jointly owned with Heritage Oil PLC's (HOIL.LN), are also expected to resume in April and the company is planning to drill six more wells around the Buffalo oil field, he said.

However, Albert Vertic, branch engineer of Casco Petroleum Overseas Ltd., told Dow Jones Newswires it is transporting its rig and up to 150 personnel back to southern Sudan after failing to secure drilling contracts in Uganda.

The company drilled Tower Resources' first well in Block 5 in 2008 but hasn't won any further drilling contracts in the country since.

-By Nicholas Bariyo, contributing to Dow Jones Newswires; 256-75-2624615 [e-mail]