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brent-crudeKAMPALA: Uganda has officially revised upwards its estimated oil reserves by 40 percent to 3.5 billion barrels after appraisal activity in two blocks revealed more crude deposits, a senior government official told Reuters on Monday.

 The east African country discovered commercial hydrocarbon deposits in its western region along the border with the Democratic Republic of Congo in 2006 and estimated reserves at 2.5 billion barrels. However, production has been repeatedly delayed by contractual disagreements, tax disputes and infrastructural setbacks.

 "We have been doing a lot of appraisal work over the last several months on the wells in blocks 1 and 2 and the reserves have been increasing and now we're able to confirm that we have about 3.5 billion barrels in place," Ernst Rubondo, the commissioner for the Petroleum Exploration and Production Department, told Reuters.

Block 1, found on the northern tip of Lake Albert is operated by a local unit of France's Total SA while block 2 is operated by UK explorer, Tullow Oil.

Total entered Uganda's burgeoning petroleum industry early this year after it and China's China's CNOOC took up a third each of British explorer Tullow Oil's exploration assets in the country for a total of $2.9 billion.

East Africa has been a focus of hydrocarbon exploration after substantial deposits of crude oil were found in Kenya, although commercial viability has yet to be established, and new major gas reserves were discovered in Tanzania and Mozambique.

On Saturday, Total said it expects to drill a total of eight exploration wells in Uganda by the end of 2013 and spend about $650 million on exploration and appraisal activity and seismic data acquisition in the same period.

 "The industry average for recoverable reserves is about 20 percent but it can go as high 60 percent ... for us we're currently estimating recoverable reserves at 30 percent based on current technologies," Rubondo said.

Uganda is expected to conduct a licensing round for hundreds of square kilometres of exploration acreage after parliament passes new oil laws expected by the end of this year.

The government says only about 40 percent of the Albertine Graben has been explored to date and has stated it will be demanding tougher terms in new oil deals, with its negotiating hand strengthened by existing discoveries.

 Uganda has said it was searching for an advisor to help it secure financing for a planned refinery to process its crude.

 Tullow says the refinery's capacity should not exceed 60,000 barrels per day to be attractive to investors but the government wants a facility with a maximum output of 120,000 barrels per day which it says is viable and can easily attract investors.?Reuters

Copyright Reuters, 2012