Multi-billion barrel oil finds in Uganda have raised investor interest in the east African nation where crude explorers have been making discoveries in the Albertine Graben region. Here are some questions and answers about Uganda's hydrocarbon finds:

* Petroleum was first discovered in the 1920s in the Albertine Graben, the northern most part of the East Africa Rift system and the first well was drilled in 1938. But the Second World War and political instability in Uganda between 1940 and the 1980s saw limited exploration.

* The search for hydrocarbons began in earnest in the 1990s after a return to political and economic stability in Uganda following President Yoweri Museveni's ascent to power. The first license was given to Heritage Oil in 1997.

* Uganda has nine blocks from its northern border with Sudan through Lake Albert on the western border with the Democratic Republic of Congo and south to Lake George. The area runs over 500 km and around 45 km in width. Blocks 3B, 3C, 3D and 4A are open. It froze licences in 2007 to create regulatory policies.

* To date, only 30% of the licensed areas have been explored, already with an estimated two billion barrels. Natural gas deposits have been found in many of the drilled areas, but no estimates on the reserve size are available.

Dominion Block 4b

WHO ARE THE MAJOR PLAYERS?

* Tullow Oil owns half of Blocks 1 and 3a, amounting to 4,285 and 1,991 square km respectively, and it has Block 2 outright with 4,675 square km. The company has drilled over 20 wells to date with an estimated a multi-billion barrel potential.

* Heritage Oil co-owns Blocks 1 and 3a with Tullow.

* Dominion Uganda Ltd, a subsidiary of Dominion Petroleum Ltd, has 100% stake in Block 4b with 2,021 square km and an estimated 378 million barrels of recoverable reserves.

* Tower Resources and Global Petroleum have Block 5 with 6,040 square km. The companies drilled the first well in May/June 2009, but did not find any oil.

* The government has scrapped the idea of a mini-refinery after larger-than-expected hydrocarbon reserves were found.

Uganda has said it now wants to build a major refinery, possibly producing 100,000 barrels per day (bpd), which is likely to cost billions of dollars and take years to construct. Uganda's petroleum consumption has risen from 8,000 bpd in 1998 to more than 13,000 bpd in 2008.

* Oil explorers want at least limited exports to start recouping investments, estimated at $500 million by the end of December 2008. Analysts say the companies do not have the capital or the will to build a major refinery, but local media have reported interest from Iran and China in the project.

* An oil pipeline to Kenya's Mombasa port, the nearest harbour and likely destination for Uganda's oil exports would need to be heated, given the waxy quality of the crude in the Albertine Graben, and involve many companies. Kenya's pipeline currently runs from Mombasa to Eldoret.

WHAT ARE THE RISKS?

* Uganda and Congo have an ongoing dispute over the border. Kinshasa fears that production on Kampala's side might drain reserves under Lake Albert on its side. High-level officials now meet regularly, and negotiations are under way to hammer out how the oil on Lake Albert should be divvied up.

* Instability in east Congo will continue to be a major source of risk as oil production might be looked on as an easy target for groups trying to grab attention of the central government and the international community. A resurgence of militia activity in the Ituri district, which borders the lake on Congo's side, has led to renewed violence in an area that was the scene of bloody conflict during Congo's 1998-2003 war.

* There is a lingering row over the attribution of two Lake Albert blocks on the Congolese side. Tullow had rights to these blocks, but one was taken away last year by the former oil minister. Tullow says that could complicate their overall operations. Earlier this year, a new oil minister hinted that the company would be invited back, but may be forced to share.

* Fears over any possible violence during elections in Sudan and a secession referendum for the south in 2011 will continue to worry investors especially in Bloc 5 along the Uganda-Sudan border. During Sudan's long civil war, hundreds of thousands of refugees flocked across the border, and Uganda's aid for southern rebels incurred the ire of the northern government.

* The question over political succession in Uganda in the lead up to a 2011 vote will continue to play a role, especially as oil production is expected to start around that time. The election and who, if anyone, will take power from long-serving Museveni will fuel uncertainty about stability in Uganda.

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