Operator Hardman today said under the MoU, both parties committed to advance appraisal and development activities to realise the “full potential” of the existing Block 2 discoveries.

They have also said they will allow enough time for the “continuing active exploration” of the remainder of the block.

The move comes after Hardman and Tullow discovered three wells in western Uganda in June, where successful testing had confirmed “excellent” reservoir quality and potentially commercial flow rates.

Nzizi-1, the next well in the 2006 exploration program, is an updip appraisal well to the southwest of Hardman’s Mputa discovery and is expected to spud by early November.

Hardman said the JV plans to undertake further 3D and 2D seismic surveys to better define the volumes of the existing discoveries and develop infill locations. It will also explore the northern area of the block to identify prospects for drilling in 2007 and 2008.

In addition, the JV will continue to evaluate the most effective manner to drill offshore prospects in Lake Albert by the end of 2007, Hardman said.

On top of the exploration and appraisal activities, the MoU partners have agreed to review the early development potential of hydrocarbons already discovered by starting concept studies for an Early Production System (EPS).

Hardman said it hopes the EPS will determine the commercial and technical feasibility for early production and could lead to the development of production and processing facilities to fuel a local power station (of around 50MW capacity).

Managing director Simon Potter said the Government’s confidence in the project’s existing resource base and market potential will allow the JV to consider an EPS.

“Further success in the planned exploration program could lead to significant expansion of domestic plans or an export option,” he said.

“We look forward to continuing to work closely with the government to commercialise the oil found in Uganda to benefit all stakeholders.”