The clock is ticking towards the flow of the first oil drop from the fields of Western Uganda near the border with the Democratic Republic of Congo (DRC). Production for export is scheduled to start in 2017 but the country may start producing for local consumption a year earlier.
Ugandan Crude oil reserves, the fourth largest in sub-Sahara Africa estimated between 3.5 billion and 6.5 billion barrels were discovered in 2006 in the Albertine rift basin at the common border with the DRC. However, Uganda’s recoverable oil is estimated at about 1.4 billion barrels which could be exploited over 35 years.
The country hopes to produce 200,000 barrels a day and export 140,000 barrels of crude oil through a pipeline which will connect Uganda to the Kenyan coast.
Both the pipeline and a 2.5 billion dollar refinery will be constructed by UK’s Tullow Oil, Total SA of France and the China National Offshore Oil Corporation (CNOOC). Uganda has also offered sister member states of the East African Community an opportunity to invest in the 60,000 barrel capacity refinery scheduled to take place in two 30,000 barrel phases. The first phase is likely to be commissioned around 2017-2018. Kenya, Rwanda and Burundi have taken up the offer while Tanzania is yet to make a decision.
The production and commercialisation of oil and gas will generate direct and indirect 150,000 jobs at the peak of production between 2016 and 2018. New jobs will be created in diverse sectors including areas such as security, hospitality, communications, banking, transport, waste management, IT services, construction, training, public relations, emergence services, advertising and logistical services.
However, Uganda cannot satisfy the oil industry in terms of required skills and oil companies may be forced to seek qualified and certified personnel outside the country. The same situation happened in other African oil producing countries such as Angola, Nigeria and Ghana. This in turn could cause dissatisfaction among the local population that they are not benefiting from the oil industry. People are also not well informed about the indirect opportunities related to oil industry.
Jobs, loyalties, infrastructure
Even before the first drops of the oil start flowing from western Uganda, the inhabitants of the oil field regions have started planning future projects based on unknown loyalties they will be getting from the oil industry. They hope to get at least seven per cent of the loyalties that the government will collect from oil production on the basis of the draft Public Finance Management Bill. However, the Bunyoro Kingdom is claiming 12.5 per cent based on a 1955 agreement signed between the British rulers and their king.
Most of these areas want to invest in infrastructure such as roads, schools, government buildings, setting up local radio to enhance communication between people and their leaders, bringing electricity to their people, establishing scholarships to the poor for instance and generally uplifting their people from poverty.
In order to bridge the gap between needed and by the oil industry and those available in the country, Tullow Oil, one of the companies involved in Ugandan oil production established a scholarship scheme in 2011 for the purpose of allowing Ugandans to study different oil subjects UK’s recognised petroleum institutions. The three joint venture partners Total, Tullow Oil and CNOOC have trained more than 200 Ugandans in the last three years.
Uganda is also training locally future oil workers. The only oil-related Ugandan learning institution, The Uganda Petroleum Institute Kigumba (UPIK) gives a two-year diploma course after which graduates spend another six months in Trinidad and Tobago. The institute has already produced 88 graduates and hopes to train 224 by 2019.
However, the institute has in recent past also been strengthening its curriculum with the help of the World Bank and UK’s Department for International Development as oil companies consider its graduates as still unskilled.
Uganda’s neighbour, the DRC, has also found 3 billion barrels of oil on its side of Lake Albert. However, the two countries almost went to war the exploratory phase after Uganda claimed it owned the black gold alone. The two countries deployed troops at the common border and a number of people lost their lives in skirmishes. The Congolese army fired at an exploration vessel on Lake Albert and killed a British worker after accusing it of illegal activity on the Congolese side of the lake. In another shootout incident, six Congolese nationals lost their lives. Both countries claim ownership of the lake’s Rukwanzi Island which is situated near an oil field block.
The two countries have since stepped back from the fringe of war and agreed to share equally all resources at the common border. However, the DRC lags behind in terms of oil fields development. The region surrounding Lake Albert on the DRC side is infested with Ugandan rebels of Allied Democratic Forces and National Army for the Liberation of Uganda that if unchecked can interfere with the oil production. Experts say the two countries cannot afford war and point out that the DRC may need the Ugandan refinery and pipeline to process and export its oil.