The Monitor (Kampala)

12 October 2011

Uganda: Here Is What Is At Stake With Uganda's Oil

Photo: The Daily Nation
An oil field near Lake Albert in western Uganda.

Parliament's debate of the country's nascent oil sector which kicked off on Monday has been as anticipated as much as it has been enthralling. Beyond rocking the boat, however, the massive allegations of billions of shillings in kickbacks to senior ruling party officials has moved to provide fresh evidence as to why government must be more open about its dealings with oil exploration companies.

Fears continue to linger over the possibility that the windfall from oil will be siphoned by bureaucrats for self-enrichment and that is the direct result of all the secrecy shrouding the contracts government signed with the oil companies.

Officially, Uganda is believed to have oil reserves of up to 2.5 billion barrels in the Albertine Graben, up from 300 million barrels recorded in 2006. With the current pace of drilling and recent finds, some analysts have said Uganda could be producing around 150,000 barrels of oil per day by 2015, a development that would place the country among top 50 oil producing nations.

There are a total nine oil exploration blocks from parts of northern Uganda through Lake Albert on the western border with the Democratic Republic of Congo and south to Lake George. The oil rich area runs over a 500km stretch and is about 45km in width covering the districts of Masindi, Kibale, Hoima and Amuru.

Until 48 hours ago, no serious debate had been made about oil in Uganda and to this moment, there has not been any opportunity accorded to publicly scrutinise the contracts government signed with the oil producing companies.

Although the contracts are currently before Parliament, lawmakers have been told they can only see but not make copies of any contents due to confidentiality clauses, another matter that raises serious doubts. More doubts are cast over what critics say is the government's decision to clandestinely select exploration companies instead of using an open and prudent bidding process or auctioning of exploration rights as has taken place in other oil producing countries like Iraq.

The main companies that have signed production sharing agreements with the government are currently Tullow Oil, Neptune Petroleum and Dominion Petroluem Limited. However, government froze issuance of licences in 2007 to create new regulatory policies, a moratorium that remains to date. Of the entire Albertine area, it is understood that only 30 per cent of the licensed areas have been explored. Did the government and people of Uganda get the best deals in the PSAs? That's a big question that goes begging.

egyezaho@ug.nationmedia.com

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