Log in
Updated minutes ago

Uganda’s oil: what’s the story?

President Museveni signing the EACOP agreement earlier

President Museveni signing the EACOP agreement earlier

Two months ago, the name Malte Gallee was hardly known within Uganda’s oil industry. Today, the young German member of the European Parliament has become a thorn to many players within the industry after he raised accusations that continue to dent the image of Uganda’s oil project.

Now, a number of investors who sit far from the decision-making tables within the industry are worried that Gallee’s campaign will further delay Uganda’s journey to achieving first oil by early 2025. Ugandan officials are, however, confident that all plans and works are progressing on schedule.

Gallee, who was in Uganda at the end of July, where he met top officials in the ministry of Energy, remains relentless on calling out what he says are human rights abuses in Uganda’s oil project – making his evangelism against the project arguably the most critical since the country discovered the resources 16 years ago.

“Dear government of Uganda, I have to disappoint you: there is no such thing as an international conspiracy. We want you to respect the rights of your people! So don’t lock them up arbitrarily, stop the death threats and ensure fair and adequate compensation. And #StopEACOP...”

Gallee tweeted recently. The hashtag #StopEACOP is in reference to a campaign sponsored by international non-government organisations that seeks to block the construction of a 1,445km heated crude oil pipeline between Hoima in western Uganda and the Chongoleani peninsular in southern Tanzania.

The German’s tweet came a few days after the European Parliament passed a resolution titled Violations of human rights in Uganda and Tanzania linked to the investments in fossil fuels projects, which rubbed a large section of Ugandans the wrong way.

Some of the resolutions called for Uganda to update its land laws to reflect international standards, which, the European Parliament says, would stop forced evictions; adequate and timely compensation for those who have agreed to vacate their land in favour of the project; urges TotalEnergies to take one year before launching the project to study the feasibility of an alternative route to better safeguard protected and sensitive ecosystems and the water resources of Uganda and Tanzania, limiting the vulnerability of the watersheds in the African Great Lakes region; just to mention a few.

Different government of Uganda officials – from the president to low rank staff within the ministry of Energy and Mineral Development - have pushed back, some of whom claim that the European Parliament’s resolution is laced with colonialist undertones and brings back memories of historical injustices meted out by Europeans on Africans.

The officials reiterated that Uganda’s oil project will move ahead as planned. Besides, the resolutions from the European Parliament are not binding. Deputy Speaker Thomas Tayebwa was blunt in his rebuttal.

“The resolution is based on misinformation and deliberate misrepresentation of key facts on environment and human rights protection. It represents the highest level on neo- colonialism and imperialism against the sovereignty of Uganda and Tanzania,” he said of the European Parliament’s decision.

President Yoweri Museveni weighed in, reminding everyone that “Total Energies convinced me about the Pipeline idea; if they choose to listen to the EU Parliament, we shall find someone else to work with. Either way, we shall have our oil coming out by 2025 as planned. So, the people of Uganda should not worry.”

With all these corporate battles going on in swanky boardrooms, Anthony Oronga, a farmer in Buliisa district, whose land was bought to pave way for TotalEnergies Tilenga oil project, cannot understand why anyone would oppose Uganda’s oil project.

Oronga is among the many project-affected persons who received compensation for their land. A few others are still awaiting compensation after disputing the valuation of their land. For some of those who received the money, such as Oronga, life could not be better.

“My life has changed tremendously,” he said recently to a team of journalists and TotalEnergies officials.

“I used to farm on a small scale, and I would earn about Shs 200,000 a month. Today, I make about Shs 7 million from all my gardens,” he said, before adding that “I have nothing but good words for TotalEnergies.”

Odongo is a farmer who grows vegetables and different types of fruits, who now has a registered company and has bought other pieces of land from the profit he has made.

Away from the noise on the different floors of the parliaments in Brussels and Kampala, and way from the brouhaha that largely defines the streets on Twitter, what are the facts about the current state of Uganda’s oil industry?

Since 2006, when Uganda discovered commercial oil resources, the country has been part of an exciting frontier for investors seeking new oil and gas opportunities. The country has placed the oil industry at the centre of its plans, and many people see it as the redeemer for the economy.

Not only have a number of businesses invested money in preparation for the opportunities, but government has also borrowed against the proceeds it expects to receive when the oil starts flowing.

Any attempt to stop the oil from being drilled is to throw the government, which is already choking on loans, into a deep debt hole. It is partly as to why the commercialisation of Uganda’s oil is important.

Estimates place the value that Uganda will get after the depletion of oil resources at nearly $50 billion – an amount that is more than the current gross domestic product of the country.

LEGISLATION

For the government to make the money it is targeting within the oil industry, the laws needed to be tight. Indeed, no sector in Uganda has the toughest legislation – be it on local content, environment, or even financial obligations – such as the oil and gas sector.

Nearly every aspect, such as what constitutes a local company, what governs the decommissioning of a field, to the location of companies for the benefit of tax purposes, has attracted the attention of the legislative arm of government.

The public has been involved in the discussions of the oil industry’s plans. Public hearings were held to bring communities up to speed on what was happening, and how they would benefit.

The civil society organisations offered views on the text that informed some of the legislation, such as the Upstream law. Many of their views were adopted and some ignored. And yet still, Uganda’s oil project today attracts the strongest criticism since the resources were discovered.

SUSPICION

To many people within the industry, the criticism is suspicious. For all the years that Uganda was promoting and developing its oil project, why wasn’t there as much spirited activism against it is today, they wonder.

Two years ago, there was a quiet lobby to stop the construction of the crude oil pipeline in favour of a metre gauge railway.

At first, the idea sounded absurd since a lot of work had already gone in preparing for the pipeline. The idea of the railway, which appeared like it sprung from the western country, started gaining traction when it emerged that Tullow Oil had in 2009 undertaken a study for that particular mode of transport for the crude.

One of the suggestions from the European Parliament resolutions is for TotalEnergies to consider an alternative route for the export of the crude oil. The EU recently committed $500 million for revamping Uganda’s old metre gauge railway.

Also, the shift in the European Parliament’s argument against the project raises some red flags. At first, the activists against the project argued that the East African Crude Oil Pipeline would increase the carbon emissions that are responsible for the drastic changes in the weather, where droughts and floods have destroyed homes and ravaged farmlands.

However, Ugandan officials claim – and rightly so – that the EACOP is nothing compared to the emissions Europe accounts for. Elison Karuhanga, a lawyer who is one of the faces advocating for the construction of EACOP, put it aptly: “A member of the European Parliament uses more fossil fuels compared to all the project affected people in Uganda’s oil project combined!”

Now, however, the arguments from Gallee, who has on some occasions sounded out of depth about certain aspects of the oil project, appear to have taken a slightly different turn – to human rights.

Throwing up the human rights card was always bound to get some mass attention, and it has. Political opposition stalwart Robert Kyagulanyi, also known as Bobi Wine, offered his two cents on the topic.

“Natural resources placed in the hands of a corrupt, inefficient and illegitimate regime can easily turn into a curse instead of a blessing. Check what is happening in mineral-rich Karamoja! Land grabbing, environmental degradation, rights violations, etc. They’re dying of hunger!,” he tweeted.

Kyagulanyi’s argument carries a lot of weight in the face of a lack of strong monitoring system to ensure that rights are protected, and the government’s poor track record on the global human rights index. And based on the numerous land grabbings, the government has a trust deficit among large sections of the population.

A number of European financial institutions had already shied away from funding the pipeline as a result of the complaints – mostly from civil society organisations – against the project but nonetheless money from Asia has been made available for the EACOP. Uganda does not need to worry much about the project funding during the construction stage.

Uganda owns 15 per cent in the EACOP, although the country has a 70 per cent share in the oil resources when production starts. The deal is that Uganda’s equity contribution for the construction of the $4 billion crude oil pipeline to Tanzania will be carried by the international oil companies. In other words, Uganda is not required to put money on the table until oil starts flowing.

This means that some of Uganda’s share of the oil proceeds will be used to repay the money that the companies paid on its behalf, and thereafter the country will start earning money.

ENVIRONMENT

When it comes to the environment, companies such as TotalEnergies appear to be keen on protecting the areas where
it operates. For example, the Jobi field, a nearly 25km stretch within Murchison Falls National park that holds about nine oil wells, has been prepared in a linear manner to limit the company’s footprint in the park.

During the appraisal stage a decade ago, the oil wells were 16, and spread in different directions over a 428 square kilometres stretch. Today, TotalEnergies, according to Moses Dabasaba, the warden and monitoring officer of the Uganda Wildlife Authority, is using less than 1.5 square kilometres within the park.

Also, some oil wells, such as the Jobi 5, have been nearly restored to their original state before any activity took place, in line with the decommissioning rules that the government put in place. Uganda also has a national oil spill contingency plan, which will guide the sector on how to behave in case there is a spill.

So, where does Uganda oil industry go from here? Quite likely the oil project will move ahead. CNOOC Uganda, the Chinese company operating the Kingfisher oil block, has started receiving parts of its rig that will drill the well. TotalEnergies expects similar equipment in the first week of November.

There is no doubt, though, that Gallee and his group of supporters has rattled some feathers and widened the space for debate about Uganda’s oil industry. The oil industry now knows that people are watching.

Comments

+3 #1 Zaitun 2022-09-28 17:35
We Ugandans enjoy suffering in then hands of this man, who told Tanzanians that he is not bothered if Ugandans suffer, after all he is a Tanzanian, and will see to it it that Tanzanians have an upper hand in the oil resources of Uganda.

What is it that these men and women in the oil industry are trying to tell us?

You better respect the German for his comments because he is seeking for the well-being of Ugandans as opposed to what some of you are claiming to say.

Or, have you all been bribed already by Museveni, the Tanzanian? If so, you better apologise or you and your families will all go to finish your days days in Tanzania, the homeland of your boss.

You do not care about the suffering of Ugandans but only about your small swelling stomacks!

May be some of you have already reserved your places in Hell with the demons that now abound in the country, pouring hell fire on innocent Ugandans just to amuse yourselves.
Report to administrator
0 #2 Lysol 2022-09-29 03:12
What oil????
Report to administrator
+2 #3 Sur 2022-09-29 10:14
Quoting Lysol:
What oil????


Museveni's oil , that's the cash cow that he is visioning will forsee him and his son on power in the foreseeable future
Report to administrator
-2 #4 Joe 2022-09-29 21:38
The script is as old as colonial times in most African countries; a white man gives up "his all" to save black peoples, Africans!

And what do our brilliant elite/politicians do! They will be celerabrating, laughing themselves silly, drinking, doing Nankassa, thanking the white boy/girl for failing yet another African ambition.

When will the African "fools" realize that the white people couldn't care less if we were non existent? The fight should be to see that the oil proceeds are spent for the common good of Ugandans, instead sabotaging the production, time is not on our side!
Report to administrator

Comments are now closed for this entry