The President of Uganda, Yoweri Museveni, inaugurated the project which will be operated by the multinational China National Offshore Oil Company (CNOOC).
The field, known as Kingfisher, is expected to produce 40,000 barrels of oil a day at its peak, according to Uganda's oil industry regulator.
The initiative takes place 17 years after the discovery of commercial oil deposits in the East African country. At peak Uganda is expected to produce around 230,000 barrels of crude oil a day.
Uganda's reserves are estimated at 6.5 billion barrels of crude oil, of which around 1.4 billion are considered recoverable.
The French multinational Total Energies, operator of the second project, known as Tilenga, is expected to start drilling in March.
