EXPLORATION COMPANY Tullow Oil has announced its largest oil discovery in Uganda to date.

Results from drilling carried out at Tullow’s Giraffe exploration well in the Lake Albert Rift Basin revealed that it is connected to the Buffalo well drilled five kilometres away, which indicates that this is the largest oil discovery in the area. It is also one of the largest recent onshore oil discoveries in Africa. As Uganda is landlocked, Tullow will have to build a pipeline if it is to export the oil. In order for this to be commercially viable, the area would have to contain 400 to 500 million barrels of oil.

Tullow now believes that the Giraffe-Buffalo reservoir contains at least 300 million barrels of oil, although this could be as high as 600 million barrels.

In a note to investors yesterday, Davy Stockbrokers said that it believes that the gross oil inventory in the Lake Albert Basin could be as high as 750 million barrels.

“The result also reduces the risk in several other large targets in the area,” the Davy note said.

“Combined with our other finds in the region, we have now clearly exceeded the thresholds for basin development,” Tullow chief executive Aidan Heavey commented yesterday.

“Options for commercialisation and first oil production are currently being fast-tracked,” he added. Tullow has interests in three licences in the Lake Albert Rift Basin, and has a 50 per cent interest (together with Heritage Oil) in the Block 1 licence area in which the Giraffe well is located.

Despite the positive announcement, Tullow’s share price fell by 3.87 per cent, or 31 cent, to €7.71 in Dublin trading yesterday. On the London Stock Exchange, its price fell by 1.13 per cent to £6.99.

Tullow is due to release a trading statement next week.