Uganda is set to sign two oil production sharing agreements with a Nigerian firm on Thursday, enabling the company to begin exploration.

The firm, Oranto Petroleum International, was among a number of companies that bid in the country's first competitive oil exploration licensing round last year.

Two other Nigerian firms and Australia's Armour Energy went through to final negotiations for the award of the PSAs.

The ministry of energy and mineral development said the deal with Oranto covers the Ngassa Shallow Play and Ngassa Deep Play exploration blocks located near the southern part of Lake Albert.

Uganda discovered oil in 2006 in the Albertine rift basin along its border with the Democratic Republic of Congo.

Gross crude reserves are estimated by government geologists at 6.5 billion barrels of which between 1.4 to 1.7 billion barrels are considered recoverable. Production is expected to start in 2020.