Oil Change International

Exposing the true costs of fossil fuels

Uganda: Africa’s “New Oil Frontier”

tullow-uganda1We are used to talking about the oil majors like Shell being in the spotlight over African oil exploration.

But a smaller player is making the headlines, with a soaring share price and two African discoveries in a week: one in Uganda and another off Sierrra Leone.

It is the Irish independent company Tullow that has the City excited, promising a new ‘oil frontier’ in Uganda. But amongst the frenzy, let’s not forget the resource curse of black gold, and the torrid history of oil in Africa.

Tullow has gone from a small oil trading company into a $10 billion company. Its stock keeps on rising. Yesterday, Tullow Oil announced another huge oil discovery in the remote Lake Albert region of Uganda, which has, in the words of the Times delivered “a fresh boost to the African state’s hopes of becoming a significant oil producer.”

Tullow’s new well could be the largest oil discovery in Uganda to date, according to Tullow said. Whether this is industry hype remains to be seen, but so far the company has drilled 27 wells in the Lake Albert region and has discovered oil in 26 of them.

The field could hold as much as 600 million barrels, nearly doubling the 700 million barrels that Tullow has already found elsewhere in the Lake Albert basin.

According to the Times, “The discoveries promise to transform Uganda into one of Africa’s largest oil producers and may prompt the industrialisation of a now remote corner of the continent.”

But the complexities of getting the oil to market are enormous as the crude oil is heavy., difficult to transport and far from a market As Uganda is thinking of refining the oil near to Lake Albert, the prospects are not good for this remote region of Uganda. It could suddenly face a huge petro-boom, including a refinery and production wells, bringing with it instant riches for some and ruin for others
Already people are warning about the downside of the oil bonanza. Glada Lahn, an energy researcher at Chatham House, told the Times that its Government faced a host of challenges if it wished to ensure that it does not suffer the “oil curse” of conflict and corruption that has affected other African countries such as Nigeria and Angola.
He added: “There is a risk that oil will distort the economy and present challenges to democracy in Uganda. Oil tends to bring with it a boom-bust cycle of development and a sudden flood of foreign currency could make its other exports less competitive.”

Boom or Bust – which one is it going to be?

Comments (1)

  1. Oil & Gas Ed says:

    The fact of the matter is that oil windfalls have helped corrupt and dictatorial leaders like the late Omar Bongo of Gabon remain in power for decades, while their countries remain underdeveloped. The recent oil discovery in Uganda will unfortunatley only bring disorder…

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