The status of Uganda’s Oil and Gas sector

by Business Times
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The EACOP System

Uganda’s oil and gas journey dates back to 2006 when commercial quantities of oil and gas resources were confirmed. As a result, the government embarked on a process to ensure that the resources are utilized sustainably to create lasting value with the National Oil and Gas Policy put in place in 2008. In the subsequent years, the country’s laws were updated to address Environmental, Social and Governance issues associated with the petroleum industry. In addition, new laws to address key issues from the industry such as petroleum waste management, climate change, and oil spills have also been enacted.

The significant investment that has now been unlocked into Uganda’s economy includes the implementation of the Tilenga Project in Buliisa and Nwoya districts (approximately US$4 billion); the Kingfisher Project in Hoima and Kikuube Districts (approximately US$1.5 billion); and, the East African Crude Oil Pipeline (EACOP) (approx. US$3.6bn). This is in addition to what the Government is already investing in the required support infrastructure, including Hoima International Airport (over US$500m) and 700 kilometres of oil roads (approx. US$900m).
By the end of the construction phase, Uganda’s Gross Domestic Product (GDP) will be significantly boosted through sectoral linkages by close to USD 9 Billion.

According to Dr Joseph Kobusheshe, Director of Environment, Health, Safety and Security at the Petroleum Authority of Uganda (PAU), several tools have been developed to facilitate the monitoring and management of environmental and social issues from oil and gas activities.

“These include a Strategic Environmental Assessment (SEA) of the oil and gas activities in the Albertine Graben which was approved by Cabinet in 2013. At the time, Uganda was among the first countries in Africa to undertake a SEA for its oil and gas projects and it was the first time that such a comprehensive SEA was being undertaken for a project of any kind in Uganda,” he says.

He reveals that all major oil and gas developments, including, the Tilenga, Kingfisher, the East African Crude Oil Pipeline (EACOP) and Refinery projects were first subjected to a preliminary environmental and social screening process that informed the conceptual design of the projects.

Oil and gas pipeline project(EACOP)
Oil and gas pipeline project (EACOP)

“Subsequently, a rigorous risk/impact assessment process was undertaken in line with national environmental laws and international best practices. The environmental and social impact assessment process provided the host communities and the general public an opportunity to freely express their views on how they might be affected by the projects. In addition to the comprehensive stakeholder consultations that were undertaken for more than one year, public hearings were held for the Tilenga, Kingfisher and EACOP projects between 2018 and 2020. The feedback from the consultation process further informed the design of the projects, but also formed part of the basis for setting mitigation measures for the identified potential negative impacts and public concerns,” he explains.

PAU, as the regulator, works closely with the licensed oil companies and other Government and non-Government partners to ensure the protection of the environment, human health and safety during oil and gas activities.

Statistics from PAU indicate that over 2,200 companies are qualified and registered on the National Suppliers Database (NSD) in 2021 up from 513 in 2017. Between 2017 and 2020, USD 52m out of the USD 147m spent by the licensed oil companies on procurement, was on local entities owned by Ugandans; this represents 35.75% of the total procurement spend by the IOCs. In addition, 1,700 Small and Medium Enterprises (SMEs) had their capacity built in the areas of health, safety and environment, bid management, financing, and corporate governance, among others.

546 entities registered on the NSD have so far got contracts in the country’s oil and gas sector. Out of these 498 (91%) were Ugandan entities while 48 (9%) were non-Ugandan.

Ugandan nationals directly employed by the oil companies as of September 2021 stand at 81%, with 59% in management, 75% technical and 100% in their support staff. The NOGTR was set up in 2019 and the total registered talent is over 5000 individuals and 120 companies.

4,435 Ugandans have been trained in various technical disciplines to competitively participate in the oil and gas sector. Through the auspices of the PAU and the Ministry of Education and Sports, the Oil and Gas Trainers Association of Uganda (OGTAU) was formed to provide a platform to coordinate and advocate for skills development in the sector.

PAU estimates that about 14,000 people will be directly employed by the companies, while about 45,000 people will be indirectly employed by the contractors. An additional 105,000 people will benefit from induced employment based on the utilisation of other services by the oil and gas sector. Of the direct employment, 57% are expected to be Ugandans, which is expected to result in an estimated USD 48.5 million annual payment to Ugandan employees.

However, some researchers have painted a grim picture, warning of among others oil spills and drawing parallels and adverse interruption to the eco-system—flora and fauna, which will deal a blow to the tourism sector, the highest foreign exchange earner of $1.6b (Shs5.6 trillion) between 2018 and 2019 before Covid-19.

Carbon (Co2) emissions from both drilling and EACOP is another strand that has been added to the equation, on backdrop of the recently released Intergovernmental Panel on Climate Change (IPPC) report which detailed that climate crisis as unequivocally damning.

A group of 13 local NGOs in a statement on June 30, 2022, claimed that Uganda’s oil activities will produce over 34.3 million metric tonnes of carbon, equal to nine-coal fired power plants.

On June 8, TotalEnergies launched the Tilenga biodiversity programme, an initiative for protecting and conserving biodiversity in and around the Tilenga area project area and mainly encompassing four main pillars; reducing human pressures and strengthening the ecological resilience of the park, implementing conservation and restoration measures for forests and their connectivity, protecting and maintaining the connectivity of habitats in the savannah and the proximity of the Bugungu natural reserve, and working with the host community to manage and restore wetlands along the southern bank of Lake Albert through community-based management initiatives.

TotalEnergies launched the Tilenga biodiversity programme
TotalEnergies launchs the Tilenga biodiversity programme

The National Environment Management Authority (NEMA) Executive Director, Mr Barirega Akankwasah, speaking at the launch of the biodiversity programme remarked that “these efforts put into this kind of programme should prove to the world, particularly at this time when activists have portrayed Uganda’s petroleum development efforts in a negative light in international media, in consideration of climate change, that Uganda is committed to sustainable development.”   In April last year, an alliance of over 260 African and international environmental and human rights organizations claimed another win in their campaign to stop the oil pipeline construction. Several banking institutions threatened to withdraw from financing the multibillion-dollar project over climate change and environment-related threats

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