Uganda has picked three Nigerian companies and one from Australia for its oil exploration licensing round, inviting them to negotiate for production sharing agreements, it said on Monday.
It announced its first competitive bidding round for six exploration blocks, covering a total of 3,000 square kilometres (1,150 square miles), in February 2015.
Bidding documents were issued to 16 oil firms but only seven submitted bids.
The Ministry of Energy and Mineral Development said it selected Nigerian firms WalterSmithPetroman Oil Limited, Oranto Petroleum International, Niger Delta Petroleum Resources and Australia's Armour Energy Limited.
The four companies will negotiate for five production sharing agreements (PSAs) covering four blocks.
"Negotiations for these PSAs is the final milestone before granting exploration rights," the ministry said in a statement. Issues for negotiation would include exploration work programmes and how the financial proceeds will be shared.
Crude oil reserves estimated by government geologists at 3.5 billion barrels were discovered in the Albertine rift basin along Uganda's border with Democratic Republic of Congo (DRC) in 2006 but production has repeatedly been pushed back.
Spats over taxation, disagreements over field development strategies and delays in erecting infrastructure such as the export pipeline agreed with Tanzania in April have all been blamed.
The jointly developed pipeline will carry Ugandan crude oil to Tanzania's Indian Ocean port of Tanga for export.
The three oil firms already operating in Uganda - London-listed Tullow Oil, France's Total and China's CNOOC - did not participate in this bidding round.