Tuesday, February 1, 2011

Uganda's oil adequate for the East African region for the next 30 years

By Esther Nakkazi

Ranking Uganda among the 50 peak producers of oil in the world and top 10 in Africa could be moments away, pointing towards ‘prosperity’ for Uganda and the entire East African region.

So far, 2.5 billion barrels of oil and gas reserves have been confirmed in a quarter of the Albertine Graben, and are projected to reach 5 billion, more than adequately providing for the East African states’ energy and fuel supplies for the next 30 years says the ministry of Energy.

Studies say that the reserves estimated at 700 million barrels and worth 50 billion, equate to two-thirds of the $78 billion, a total annual gross domestic product of the combined EAC states.

With this income, Uganda has a chance to lift its 33 million people out of poverty and to directly finance its development for sectors like health, education, agriculture and roads as well as offer employment to populations in the neighbouring east African member states.

Uganda also has a chance to secure and lower the cost supply of crude and petroleum products in region, transforming the whole EAC economy.

Now, the Uganda oil reserves are said to surpass the region’s needs, so countries in the region stand to gain from exports, but that calls for integration of infrastructure-rail, road, pipeline- to reduce operational costs to allow for competition with middle-east oil producers.

At the exploration stage, now, and moving to development the country will need successful and collaborative partnerships both in the EAC region and internationally.

The partnerships, will enable other East African community member states to develop their own oil and gas sectors as most of them are already at the exploration stage.

In Rwanda, oil exploration is taking place in the Kivu Graben; Kenya has four sedimentary basins in the Rift Valley, Lamu, Anza and Mandera that are under exploration.
While, the Songo Songo and the Manzi bay gas fields in Tanzania are also with confirmed hydrocarbon potential.

All these initiatives across the region will lead to growth and expansion of the oil sectors, and require new technologies, industries and skilled manpower.

Also key to the growth of the oil sector is a solid, reliable supply chain that requires many local suppliers of all sorts of services and equipment. This could lead to growth of the small-scale industries in the region and grow employment opportunities.

Already, the type of crude, low skilled labor force in the oil sector and the preference for a mini-refinery at home puts Uganda in a precarious position that calls for big investment.

Experts say the crude is a sweet, waxy and heavy crude that solidifies at room temperature and requires a long development cycle and heated transportation.

And, the multiplicity of 15 oilfields spread over 160 kilometers, as well as a home and regional refinery present an opportunity to develop both the Uganda and regional transport sector.

So far there are oil and gas pipelines laid between Dar es Salaam, Tanga and Mombasa, and the extension of the Mombasa to Kampala oil pipeline to Kigali and Bujumbura is underway.

Although some of the services and goods required in the oil industry are very specialised, many small companies in the region will benefit from offering services like construction, trucking, catering, waste management, security, transport and accommodation.

Man power is also required to provide services such as environment consultants, fabrication, maintenance, man power management services, banking- are services that need to be fully developed.

And, Uganda alone does not have the capacity and skilled manpower to fill these jobs. For instance, Oil companies employ up to 300 Ugandans on a seismic survey and about 100 Ugandans on a drilling project but mainly to do casual work because of lack of the skilled expertise in the country.

However, some have suggested that all will not be rosy, oil and gas reserves for Uganda could undermine other sectors in the economy and damage the environment. But all that stands to be tested with the Uganda Oil Industry, the first to develop in the region.


1 comment:

  1. You have an admirably optimistic view of the benefits that will come from oil development here in Uganda. Keep in mind that the "needs of the 33 million people" in Uganda isn't the right equation. By the time oil really starts being produced in another 7 - 10 years, what will the population be? 50 million? 60 million? It is supposed to be over 100 million 40 years from now.

    Now is the time to put pressure on the government AND Tullow Oil to ensure that high-level job training and hiring are actually available here, or the well-paid jobs will continue to go to expats.


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