Why is it Taking so Long? Solving the Oil Extraction Equation in Uganda

Abstract

During the past decade, Uganda has become one of the world’s fastest-growing economies, but the country’s development needs have not yet been met, and the government’s revenue sources are less than sufficient to satisfy them. Therefore, when oil was discovered in 2006, hopes were raised regarding Uganda’s future, since the oil money could provide substantial funds enabling a transformation of the country. According to the latest figures, Uganda has 6.5 billion barrels of oil, which makes the country the third-largest oil holder in the ssa region (after Nigeria and Angola). Unfortunately, even though almost a decade has passed since the first oil was struck, production figures have remained at zero. Given the huge needs of Ugandan society and political rhetoric of Uganda as a developmental state, it is perplexing that it is taking so long to start extracting oil in the country. The major objective of this paper is to identify and analyse major causes of oil production delays (underdevelopment of infrastructure, environmental aspects, disputes with international oil companies, legal framework adjustments, and above all vast patronage network) as well as to contribute to a better understanding of recent dynamics in the Ugandan oil sector.

The Implications of Global Oil Exploration for the Conservation of Terrestrial Wildlife

“…The development had its final investment agreement approved in 2022, with expectations of commercial production beginning in 2025 (Offshore Technology, 2022). Concurrently, since 2013, the Ugandan government has been in the process of establishing a 30,000 barrel-per-day oil refinery 100 km south of MFCA ( Ojambo et al, 2013 ;Polus and Tycholiz, 2016 ). Once operational, this oil refinery will process crude oil piped from MFCA.…”

“…Once government contracts and permits are signed, the project can move into the development phase, in which the limited extraction apparatus, treatment sites, and other infrastructure are expanded to prepare for commercial production. This can take between four and 10 years ( Polus and Tycholiz, 2016 ). When complete, oil development then enters the extraction phase, producing barrels of oil for as long as the deposit remains commercially viable.…”

Uganda’s oil: How much, when, and how will it be governed?

“…We also look at the relatively long process of commercializing oil. This has been a subject of debate in the literature we refer to, as to whether this delay represents deliberate government choice or is an early manifestation of inadequate capacity and elite capture (Patey 2015;Polus and Tycholiz 2016).…”