China wins $2 billion oil deal in Uganda

China's state-owned CNOOC has secured a $2-billion deal to develop a petroleum field in Uganda and help propel the east African nation into the club of oil-producing countries, an official said Friday.

"This is a major breakthrough as a country," Uganda's junior energy minister Peter Lokeris told AFP, confirming that a deal had been reached earlier this month with the China National Offshore Oil Corporation.

"It is a milestone towards making us self-sustaining as far as oil and gas production is concerned," he added.

"The contractor among other responsibilities will be responsible for developing the Kingfisher oil field which should become operational in the next four years from now," the minister added.

Uganda has oil reserves estimated at 3.5 billion barrels but the path to production has been a bumpy one since deposits were discovered in 2006 near its border with the Democratic Republic of Congo.

Such reserves have the potential to radically alter Uganda's economy and could eventually as much as double the national income.

Lokeris said he expected the initial output of the new Chinese-run field to be modest.

"We expect to produce about 40,000 barrels of oil per day once the Kingfisher well is fully developed and operational," he said.

China has invested heavily in Africa's oil sector to feed its energy-hungry economy.