Tullow Oil expects to start producing oil in Uganda within two years.
The company says the estimated reserves in the Albertine Basin of the country may be as much as 250 million barrels - its biggest ever oil project.
The company, which last year bought rival Hardman Resources in a bid to expand its presence in Africa, made the announcement yesterday as part of its annual results statement.
The Dublin and London-listed group recorded a 47 per cent increase in pretax profit to £263.3 million (€387.8 million) last year, boosted by higher production and a rise in commodity prices.
While an improvement on the prior year, the profit figure came in below analysts' expectations as a result of a higher-than-expected depreciation charge relating to the Schooner gas field in the UK.
Revenue for the year was up 30 per cent, at £578.8 million, helped by strong increases in European gas production, stable African oil output and significantly higher price realisations, the company said.
For the year, average annual production was 11 per cent ahead of the prior year, while sales prices were 29 per cent higher.
Tullow reiterated the forecast from its February trading update that production would reach 85,000 bpd (barrels of oil equivalent per day) by the end of this year.
During 2006 Tullow spent almost £1 billion growing the business, of which £332 went on capital expenditure and £595 million on the acquisition of Hardman.
Finance director Tom Hickey said the highlights of 2006 were the discoveries in Uganda, the Kudu gas project in Namibia and drilling for oil in India.
He said the results in Uganda had "exceeded the company's most optimistic expectations", adding that by early 2009 it hoped to be producing 6,000 bpd for the local Ugandan market.
