KIGALI (Reuters) - Rwanda is encouraged by the discovery of oil sediments in the west of the country after aerial surveys by Canadian firm Vangold Resources.

The small, hilly central African nation lies on the Albertine Rift and shares similar geological features with neighboring Uganda to the north, where oil has been found.

"The area where prospecting is being done shows indications of the oil potential,” Albert Butare, Rwanda’s state minister for energy and water, said in an interview late on Monday.

"To what extent and what quality is what the studies are going to come out with, but ... there are real indications of the possibility of the existence of oil,” he told Reuters.

In May, Vangold Resources will bring in a specialised boat to conduct seismic surveys of Lake Kivu which borders Rwanda’s volatile neighbour, Democratic Republic of Congo.

Landlocked Rwanda has been plagued by fuel shortages and rationing in recent months due to disruptions to supplies coming from east Africa’s coastal economic powerhouse, Kenya.

At $0.24 per KWH, Rwanda has one of the region’s most expensive energy tariffs, Butare said, making it uncompetitive for exporters.

He said he hoped the price of electricity would be halved to between $0.12-0.15 per KWH through investments in solar, wind, gas, geothermal and hydro-energy production that are planned over the next three years. 

"We’ve decided to embark on strategies by leaving no stone unturned in terms of investing in different potential resources,” Butare said.

Rwanda is in final talks with ContourGlobal to set up a 100 MW methane gas project on Lake Kivu, as well as a further 100 MW project by a consortium led by Kenya’s Industrial Promotion Services, together with the International Finance Corporation (IFC) and African Development Bank (AfDB).

By 2012 Rwanda wants to triple electricity access to reach some 350,000 households by rolling out a rural electrification programme, Butare said.

Central to this is micro-hydro generation ranging from 5 KW to 3 MW projects at more than 300 potential sites, including remote mountainous areas where it is too expensive to extend the national grid.

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