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By Tim C*ocks

KAMPALA, Oct 11 (Reuters) - Tullow Oil will drill an eighth well in its Uganda prospects this month in a bid to know the extent of reserves it estimates to be up to 800 million barrels in one oil pocket, an executive said on Thursday.

Tullow Uganda's production and operations manager Peter Jarvis told Reuters the London-based firm had mobilised a heavy rig to drill into a structure just inside Lake Albert.

"By January of next year, we should know whether the oil is actually there in the system," he said.

"We will have drilled a well into the side of the structure that will tell us how much oil is in many zones. We could make educated guesses as to the reserves."

Uganda has become a new frontier in the quest for oil on a continent largely dominated by west African sources.

Tullow owns three concessions in the Albertine basin, on the western fork of the Great Rift Valley straddling Uganda and Democratic Republic of Congo. It shares two of those in 50-50 partnership with Canada's Heritage Oil .

Seven wells so far drilled in two pockets all yielded oil, the company says. But seismic data for this next one had raised hopes of a massive find.

"It's a big structure with big upside potential - we're talking 800 million barrels if it's good, based on the 3D seismic," Jarvis said, adding that there were a number of other structures the company was also surveying.

Heritage has also drilled in one block to more than 3,000 metres and found crude flowing at 14,000 barrels per day.

Should Tullow and Heritage find enough for export, they will build a 1,300 kilometre (807 mile) pipeline to the Kenyan port of Mombasa.


COMPLETE PICTURE

Jarvis said Tullow's wholly-owned venture had proven reserves of around 100-250 million barrels, but would need at least 300 million for a pipeline to be economic.

He said any export operation would struggle to match the efficiency and cost of west African production, which is closer to the sea and has well-established oil infrastructure.

Should the heavier rig strike oil in the lake, Jarvis said Tullow would mobilise a lighter one for drilling nine further wells on shore by the end of next year, hopefully giving the company a complete picture of the reserves in its block.

The oil already tested is not sufficiently light to move down the pipeline by itself. Tullow had not decided whether to solve this by heating the pipeline, putting chemicals in the oil or upgrading it on site, Jarvis said.

"If we find big deposits and build a pipeline, we're likely to ... bring in somebody else to help fund the major expenditure," he said, declining to say whether Tullow had yet been approached by any majors.

The prospect of oil has fuelled tensions between Uganda and Congo. Two skirmishes broke out on the lake in the last few months, one in which a British oil worker was shot dead.

Jarvis said Tullow was concerned about insecurity on the lake, but encouraged that the two former enemies were in talks to resolve tensions over the border in Lake Albert.

"The governments do appear to be making major efforts to get an agreement."

((Editing by James Jukwey; [email protected]; +254 20222 4717))