Uganda’s oil milestones in 2013

HOIMA-In 2013, the discovery of commercially viable oil deposits in Uganda continued to influence politics and social dynamics of various sections of the public.

Oil has been a subject of intense public debate since Mputa-1 oil well was drilled and countered hydrocarbons in January 2006 and thereafter, oil explorers enjoyed back-to-back discoveries in subsequent years to date.

In 2013, Uganda moved closer to joining the list of oil producing states when CNOOC begun consultative processes to develop the Kingfisher oil field.

The Kingfisher field is estimated at an average of 635 million barrels, of which 196 million barrels are estimated to be recoverable. The field will be developed to produce between 30,000 – 40,000 barrels of oil per day.

Oil laws
In February, Parliament passed the second of three laws aimed at regulating the oil industry. The Oil (Refining, Gas Processing and Conversion, Transportation and Storage) Bill, 2012 regulates the installation and operation of oil and gas processing infrastructure and marketing of final products.

Parliament had in December, 2012 passed the first of the three Bills. At the end of 2011, Parliament imposed a moratorium on granting of new oil exploration licences until all necessary laws have been passed.
On March 21, President Museveni assented to the Petroleum (Exploration, Development and Production) Bill, 2012, making it an Act of Parliament. The new Act repealed the Petroleum (Exploration and Production) Act, 1985 as revised in 2000.

The Act provides for regulation of petroleum exploration, development and production. It also provides for the establishment of the Petroleum Authority and the National Oil Company.
It also regulates the licensing and participation of commercial entities in petroleum activities and provides for open, transparent and competitive process of licensing.

Civil society activists, however, contested some provisions in the law about the renewal of Exploration Licences and Petroleum Production Licences.

Transparency activists argued that there is no provision for parliamentary oversight or public objection to renewal of exploration licence or allocation or renewal of a production licence.
They argued that the oil laws so far passed grants the minister unchecked power to issue oil licences and regulate the oil industry.

Refinery progress
On December 16, government began compensating land and other property owners who will be displaced by the oil refinery in Hoima District that will cover 13 villages in Buseruka Sub-county.

The compensations were, however, launched amidst protest from some of the affected property owners who claimed that the compensation rates used by consultants were low, out-dated and that women were side-lined in the process. Government also announced the second phase of the public tender for lead investor and operator for the development, implementation and operation of the oil refinery.

The tender attracted responses from 75 firms. Eight consortia submitted detailed Statements of Qualifications, and six were short-listed to receive the Request for Proposals (RFP). One of these firms will be selected during the first half of 2014 to lead the Uganda Refinery Project.

Discoveries
Gunya-3A well became the 104th well and drilling started on August 9. Gunya-3A is operated by Total. The discovered resources in the Albertine Graben are currently estimated at more than 3.5 billion barrels of oil with at least 1.2 billion barrels as recoverable.

Tullow Oil country report
Tullow Oil farmed down its interests on Uganda’s exploration blocks to bring in France’s Total and China’s state-owned CNOOC which are awaiting government approval of their field development plans to start setting up production infrastructure.

In November, Tullow Oil released a report tracking progress since its entry to Uganda, almost a decade ago. In the report, Tullow Uganda announced an 84 per cent success rate of its exploration work since 2004, with 66 wells out of 79 finding oil. It also said it had discovered 1.7 billion barrels of oil and invested about Shs7 trillion to date in exploring for oil in Uganda.

Government probe on oil NGOs
In September, the Internal Affairs minister, Gen Aronda Nyakairima, announced that government is investigating Non-Governmental Organisations suspected to be involved in activities aimed at undermining Uganda’s oil and gas industry. Civil society organisations in-turn cautioned the government against using threats and intimidation to cripple their activities.

King’s visit to oil sites
In April, Omukama of Bunyoro Solomon Gafabusa Iguru visited selected oil exploration sites in the kingdom to verify claims of alleged marginalisation of his people. President Museveni appointed a minister for Bunyoro Affairs, but it is yet to grant its demand for 12 per cent of oil proceeds.

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