Kampala, Uganda | URN | Uganda’s oil and gas industry has a bright future, despite pessimistic views caused by the declining role of fossil fuels, as well as the ability to utilize the resources for the benefit of Ugandans according to experts.
A continental network comprising willing governments and businesses allied to the industry thinks Uganda has made enough preparations for this, as well as efforts to avoid the oil curse.
The exploitation of the country’s petroleum resource has been delayed for almost a decade after Hardman Petroleum, later acquired by Tullow, discovered commercially viable deposits in 2006.
However, ensuing debates and negotiations involving the executive, the legislature, the investors and the civil society have caused discomfort among Ugandans that the resultant delays could erode the value of the resources.
Amidst all this, the migration from fossil fuel to cleaner sources of energy is also gathering pace, with the automotive industry which is the main consumer increasingly going for battery-powered electric engine vehicles.
This literary affects the value of petroleum and raises questions as to whether Uganda and other nascent industries will benefit from the heavy investment currently being sunk into the commercial development of the resources.
There are worries that by the time Uganda gets into full production in 5 to 7 years, the commodity will have lost its value. But the African Energy Chamber Chairman, NJ Ayuk says sentiments about the future value of oil are being presented by those who know little about the industry.
In an interview with this publication, Ayuk, who is also the Chief Executive Officer of Centurion Law Group, says this will also be supported by the growth of African economies and populations as well as growing demand in Asia and China, a leading investor in Uganda’s oil. Ayuk said that instead, the migration process will actually boost prices for Uganda’s oil because as the west pulls out, the demand will increase.
Global petroleum prices are usually influenced by speculation arising from happenings that might affect production. The highest recorded price per barrel was USD 147 in July 2008, when there was a threat by Libya to cut output, and the oil producers’ cartel, OPEC, predicted prices to reach USD 170 that year.
The collapse of one of the largest financial institutions, the Lehman Brothers, the strengthening of the US Dollar and the anticipated decline in demand in the European Union was blamed for a drop in prices to USD 35 a barrel by December that same year.
Meanwhile, Ayuk, who was last week in Uganda on a study tour of the industry hails the role of the civil society saying they make sure that each party plays its part responsibly, which will protect the resources and the environment among others. He added that it was good that Uganda took a long understanding of the industry and learning lessons from other countries that started developing their industries before.
This would therefore help Uganda manage the resources better, for the benefit of the citizens and avoid the oil curse and resource poverty that have characterized countries like Nigeria, yet they were avoided by others like Ghana and Trinidad and Tobago.
Among other preparations, Uganda has focused on the training of both managers and technicians of the industry. This, according to the government, will help the country ensure that most of the jobs and revenues will go to Ugandans, especially under the national content policy.
Ayuk stressed that Uganda has built the best human resource capacity in the region, and is confident it will manage the oil industry adequately.