Oil & Gas; Final Investment Decision delay sparks discomfort among CSO’s

Kampala, Uganda  | THE INDEPENDENT | The delay in the announcement of the Final Investment Decision on the Uganda oil project is causing unease among civil society organizations in the Albertine graben.

Uganda discovered approximately 6.5 million barrels of commercially viable oil deposits in the Albertine graben in 2006, raising expectations for the industry to boost competitiveness among homegrown investors and stimulate inclusive development.

The government had initially hoped that the first oil would come out in 2013 but the deadlines have since been changed six times to 2022.  But the Final Investment Decision which would constitute decisions made by various partners to inject money in projects to commercialize Uganda’s oil resource still eludes the country as joint venture partners Total E&P, China National Offshore Oil Company-CNOOC and Tullow Oil Plc continue to register setbacks to their efforts.

Last year, Tullow Oil failed to execute its planned farm-down of part of its one-third stake to its partners; Total E&P and CNOOC, a prerequisite for the company to reach a Final Investment Decision (FID). It later abandoned talks after failing to secure a deal amid a capital gains tax dispute with the government.

In the aftermath, the Total-led section of the project, involving the construction of the USD 3.5 billion East Africa Crude Oil Pipeline (EACOP) taking oil to the Tanzanian coast at Tanga, was also suspended on September 5, 2019, further delaying the much-anticipated commencement of commercial oil production of oil in the Albertine graben.

Now CSOs are saying that the failure by the government and the International Oil Companies to make the Final Investment decision-FID is negatively affecting both local and international investors.

Jennifer Baitwamasa, from Navigators of Development Association-NAVODA says that people who had planned to invest in the oil and gas sector have lost hope in the absence of the Final Investment Decision.

Ismail Kusemererwa, the Executive Director of Mid-Western Anti-corruption coalition-MIRAC says that several people are gradually abandoning the sector.

Michael Businge from Bunyoro Albertine Petroleum Network on Environmental Conservation-BAPENECO says that a number of people who had been employed by the International Oil Companies lost their jobs after the Oil Companies down scaled activities in the Albertine graben.

He demands that the government immediately negotiates with the Joint Venture Companies to ensure that FID is made to allow serious oil activities to commence.

Businge says that the current suspension of activities on the development of the East African Crude Oil pipeline by Total E&P has greatly frustrated people in the Albertine.

The EACOP project is one of the midstream commercialization projects for Uganda’s oil and gas industry. Once built, it will be the longest heated crude oil pipeline in the world, at 1,443km, running from Kabaale in Hoima district to Tanga port in Tanzania.

Total plans to drill over 419 wells near Lake Albert in western Uganda for the Tilenga project which could produce 200,000 Barrels of crude a day.

The government has heavily invested in the Infrastructure, Technology, security, legal and fiscal framework as well as human resource to ensure that the international oil companies are satisfied and can tick all the boxes leading to the signing of the Final Investment Decision.

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