- I. Introduction
- 1. Why a Source Book?
- 2. Opportunities and Challenges
- 3. The Extractive Industries
- II. Cross-Cutting Topics
- 4. Transparency and Accountability
- III. The Extractive Industries Value Chain
- 5. Policy, Legal and Contractual Framework
- 6. Sector Organization and Institutions
- 7. Fiscal Design and Administration
- 8. Revenue Management and Distribution
- 9. Sustainable Development
Oil and Gas
After the first discovery of oil in 2006, Uganda is now considered an important oil and gas nation of sub-Saharan Africa and has become an attractive destination for oil and gas investment. It is notable that the earliest oil deposits discovered in 2006 werre clustered underneath important areas for tourism and nature conservation, including the Murchison Falls and Queen Elizabeth national parks. As a result, much of the early exploration has been undertaken with phased, single-vehicle mounted rigs (one-third of the height of the usual 50 metre structure) in an effort to minimize human and wildlife disruption.
Despite the extraction of hydrocarbons being a relatively recent realisation, the presence of petroleum underneath the Albertine rift valley has long been suspected; the first report on this subject dates back to 1926 in E.J. Wayland's Uganda National Geographic Survey 'Petroleum in Uganda'.[*] The 2006 test made this suspicion official, with significant reserves of oil in the Lake Edward-Albert basins along the Uganda-DRC border, which is along the same Albertine rift valley first suggested for petreloum reseves nearly eighty years ago.
The Albertine Graben is Uganda's prime prospective sedimentary basin for hydrocarbons. The basin forms the northern most part of the western arm of the East African Rift System, stretching from the border with Sudan in the north to Lake Edward in the south, a distance of over 500 kilometres. Although of variable width, the Graben is commonly 45 kilometres wide and extends into the Democratic Republic of Congo in some parts.[*]
In contrast, the other basins,[*] for example: the Hoima basin, East of Lake Albert; the Lake Kyoga basin, further East in the country; and the Kadam-Moroto basin, still further East of the country in the Karamoja sub-region, are all still under investigation.[*]
There are currently four active Production Sharing Agreements (PSAs) that have been signed with international oil companies as detailed below:
- Exploration Area 1: this Licensed Area is comprised of 3,058km2 and was licensed to Total E & P Uganda BV (Total), Tullow Uganda Limited (TUL) and China National Offshore Oil Corporation Uganda Limited in February 2012 and is currently being operated by Total;
- Paara Discovery Area 1A: this licensed area is comprised of 598km2 and was licensed to Total E & P Uganda BV (Total), Tullow Uganda Limited (TUL) and China National Offshore Oil Corporation Uganda Limited in February 2012 and is currently being operated by Total;
- Exploration Area 2: this licensed area is comprised of 4,675km2 and was licensed to Total E & P Uganda BV (Total), Tullow Uganda Limited (TUL) and China National Offshore Oil Corporation Uganda Limited in February 2012 and is currently being operated by Tullow; and
- Kanywataba Prospect Area: this licensed area is comprised of 344km2 and was licensed to Total E & P Uganda BV (Total), Tullow Uganda Limited (TUL) and China National Offshore Oil Corporation Uganda Limited in February 2012 and is currently being operated by CNOOC.
More than 17,400 square kilometres of Albertine Graben which is currently unlicensed[*] will be licensed through a licensing round after the Petroleum (Exploration, Development and Production) Bill 2012 is enacted. To date, Uganda’s hydrocarbon exploration activities have had an unprecedented 90% drilling success rate, with eighty deep wells drilled, seventy-two of which have encountered hydrocarbons in the subsurface. The flow testing of some of the wells with multiple horizons have registered cumulative flow rates in excess of ten-thousand barrels of oil per day (10,000 bopd).[*]
Uganda has substantial natural resources, including well watered arable land (21.6%), and its economy is dominated by agriculture, hydropower, sizeable deposits of copper, cobalt, gold among other minerals, and largely the just discovered reserves of crude oil and natural gas. With resources of more than 50 minerals, it ranks amongst African countries as having one of the most diverse mineral endowments.
The mining industry in Uganda reached peak levels in the 1950’s and 1960’s when it accounted for up to 30% of Uganda’s export earnings. However, the recent global economic slowdown led the sector to decline drastically and the political instabilities of 1970's. It should be noted that the decline in mineral production is not due to resource depletion, but poor governance at one time coupled with the global product price decline. Uganda is the third largest tungsten producer (2.5%) and fifth largest tin producer (0.27%) in Africa. Uganda has one of the largest high grade vermiculite resources in the world and was the fourth largest producer in Africa in 2007. There was no recorded vermiculite production for 2008 following temporary closure and a change of mine ownership, but in the beginning of 2010 a total of 517 licenses were issued leading to 12.8% sector growth in the FY2009/2010 Uganda Investment Authority.
The Public-Private Alliance for Responsible Minerals Trade (PPA) is a new, joint initiative among governments, companies, and civil society to support supply chain solutions to conflict minerals challenges in the Democratic Republic of Congo (DRC) and the Great Lakes Region (GLR) of Central Africa. Leaders worldwide are calling for action to address conflict mineral concerns while delivering solutions that benefit those involved in responsible minerals trade in the Great Lakes Region. The PPA aims to demonstrate that it is possible to secure legitimate, conflict-free minerals from the Great Lakes Region.
L’Alliance Public-Privé pour le commerce responsable des minerais (APP) est une nouvelle initiative conjointe de gouvernements, d’entreprises, et d’organisations de la société civile visant à soutenir des solutions aux défis posés dans les chaînes d’approvisionnement des minerais dits « de conflit » dans la République démocratique du Congo (RDC) et de la Région des Grands Lacs (RGL) en Afrique Centrale. Dans le monde entier, des dirigeants appellent à l’action afin d’apporter des solutions aux préoccupations concernant les « minerais du conflit », tout en offrant des réponses qui seront bénéfiques à tous ceux qui interviennent dans le commerce responsable des minerais dans la Région des Grands Lacs (RGL). L’APP soutient qu’il est tout à fait possible d’obtenir des minerais validés et certifiés « sans conflit » de la Région des Grands Lacs.
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