Uganda has vehemently refused to abandon its oil and gas projects. The government of Uganda sees oil development as a way to diversify energy supplies and improve energy security by cutting reliance on oil imports.
Uganda is determined to exploit its oil and gas resources even with the challenges posed by the energy transition or net Zero debate.
The determination by Uganda to tap into the black gold resources for development will be defended at the upcoming UN Climate Change Conference (COP28) by the Minister of Energy, Ruth Nankabirwa, or her top technocrats like Engineer Irene Bateebe, the Permanent Secretary.
Uganda has maintained that it needs oil revenue as an enabler for its
Sustainable Energy for All (SEforALL) initiative at a time when everyone has an opinion about the role of the oil and gas
industry in the transition to net zero emissions. Some have suggested that Uganda should not go ahead to invest more resources in oil and gas. They have warned that the projects will not be economically viable and will render some of the infrastructure being developed stranded.
There have been massive campaigns urging
Uganda to stop those two projects that sit on an estimated 6.5 billion barrels of
crude, of which about 1.4 billion barrels are currently considered recoverable.
September 2022, the European Parliament passed an
by a large majority urging a halt of the projects
including the East Africa Crude Oil Pipeline Project (EACOP) whose construction
is expected to take off early next year.
of production wells has been ongoing at the Kingfisher and Tilenga fields in
Bulisa and Nwoya with production expected at the end of 2025.
oil and gas activities especially the development of infrastructure worth over
US$ 15 billion in the country before commencement of production, together with
the expected annual revenues in excess of US$ 1 billion are beginning to
significantly impact the country’s economy.
Oil production in the country is
expected to peak at 230,000 barrels of oil per day.
expected that the Tilenga and Kingfisher fields developments will generate up
to USD 8 billion in fiscal revenues.
government plans to develop a 60,000 barrels per day oil refinery at Kabaale Industrial
Park, Hoima. FID for the refinery is expected this year with a view to commissioning
the refinery in 2027.
Those developments have run into strong opposition from rights activists and
environmental groups that say it threatens the livelihoods of tens of thousands
of people and fragile ecosystems in the Albertine.
CO2 emissions from fuel combustion are estimated at 5.7 Mt CO2. Emissions from
fuel combustion by sector: transport 66%; industry 22%; agriculture, forestry
and fishing 10%; buildings 2%; electricity 1%.
has vehemently refused to abandon its oil and gas projects.
The government of
Uganda sees oil development as a way to diversify energy supplies and improve energy
security by cutting reliance on oil imports.
also hopes oil development will help reduce unsustainable biomass use by providing
more LPG for cooking and help develop a petrochemical industry.
arguments are part of Uganda’s energy transition strategy to be launched in
Dubai at the UN Climate Change Conference (COP28).
Eng. Irene Bateebe, Uganda’s objective in the energy transition strategy is to
mitigate energy-related greenhouse gases as well as reduce the rate of deforestation due to the demand for biomass energy.
example, for the petroleum, we are developing but we will also put them into
decline in the long term,” said Bateebe.
countries including Uganda have committed to net zero by 2050.
Put simply, net
zero means cutting greenhouse gas emissions to as close to zero as
possible, with any remaining emissions re-absorbed from the atmosphere, by
oceans and forests for instance.
shows clearly that in order to avert the worst impacts of climate change and
preserve a livable planet, global temperature increase needs to be limited to
1.5°C above pre-industrial levels.
Earth is already about 1.1°C warmer than it was in the late 1800s, and
emissions continue to rise. To keep global warming to no more than
1.5°C – as called for in the Paris
– emissions need to be reduced by 45% by 2030 and reach net
zero by 2050.
does the government plan to achieve its net zero plans in energy?
to Bateebe, the objectives of Uganda’s energy transition strategy have largely
focused on planning for the energy system to support rapid economic
time we are talking about the transition, we cannot hide away from the fact
that a number of developing countries are energy-poor and they must be
supported to advance and also develop economically,” she explained.
should Enable Uganda to meet SDGs.
in the plan, Uganda seeks to articulate a realistic yet ambitious scenario for
providing universal access to electricity and clean cooking as per the Social
Development Agenda Seven (SDG7).
the key point is how we transit the 88% of the population that is using
traditional biomass to our target by 2050 under this strategy of reducing it to
17 % but also increasing low-carbon fuel to 72%,” Bateebe told URN.
difficult dilemma for Uganda is how to fund development if it abandons
exploring newfound oil and gas resources due to climate change concerns.
and experts have argued that Uganda stands to lose out on its oil and gas
resources because it will not be profitable as the world shifts away from oil.
Some have gone further to not that there shouldn’t be any effort to turn gas from
the fields into Liquefied Natural Gas (LNG) yet some estimates indicate the
Small-scale LNG market will grow from USD 46.4 Billion (2023) to USD 92.8
billion in 2028.
Uganda’s case, the deployment of cooking gas or LNG will be one of the technologies
to meet the
Sustainable Energy for All (SEforALL) Initiative.
SE4ALL is an initiative by
the United Nations (UN) Secretary General towards the achievement of Sustainable Development Goal
– access to affordable, reliable, sustainable, and modern
energy for all by 2030. Will Uganda’s Oil be economically
Paul Bagabo, a consultant with the Natural Resource Governance Institute NRGI
has over the years warned that the country should not invest in oil and gas
because of the risks associated with the energy transition.
further argues that the cost of production of Uganda’s oil should fall so that
Uganda produces oil a much lower level to meet the breakeven point for oil to
have the risks that as a country we shouldn’t invest much in the oil sector
because of the falling demand that is necessitated by the energy transition”
the government and lead investors like TotalEnergies insist that the Oil and gas market fundamentalsindicate that a substantial amount of
money will be invested in oil and gas.
According to TotalEnergies, energy is a
commodity market and in a commodity market. And that in a commodity market, one
needs to be sure about what people are going to buy. One of the key aspects of the energy market is
the growth coming out of emerging markets from the global south. Five billion
people today excluding China need much more energy to be lifted out of poverty.
Patrick Pouyanné, Chairman and Chief
Executive Officer, TotalEnergies said “We are guided by a balanced strategy. We have
two pillars of oil and gas on one side, the energy of today where the demand continues
to grow, and preparing for the future by developing a profitable large power
Pouyanné explained that TotalEnergies has refocused its portfolio on fundamentals like low cost in order to
deliver value and low emissions. “Because our first duty as an oil and gas
producer is to slash down the greenhouse gas emissions throughout our operations”
He said their
strategy is fully compatible with a high level of profitability. “We demonstrated
that you can be strong in oil and gas and develop your energy transition
strategy. While remaining profitable, “said Pouyanné
The company said it focuses on the most resilient
oil projects, meaning those with a carbon intensity lower than its existing portfolio
average and featuring the lowest breakeven points, below $25 per barrel.
An evaluation carried out in 2022 using the Petroleum Authority of Uganda’s Upstream
Economic Model found that the total cost of developing and producing a barrel of crude
oil in Uganda is about USD 17.73, excluding oil pipeline tariffs, which could
be expected to add another USD 12.77/bb.
of the reports by the International Energy Agency (IEA) indicated that demand
for oil will grow through the decade.
TotalEnergies on the other hand estimated
that 106 million barrels per day will be needed by 2028. Demand for oil reached
an all-time high in June 2023 due to longtime drivers like the need for over
five billion people in the global south to access energy to be lifted out of
IEA projects that investments in oil and gas will total USD 800 billion this
year. IEA said the current $800 billion invested annually in the global oil and gas
sector could be halved by 2030 if a goal to limit global warming to 1.5
degrees Celsius is to be reached.Energy
is a vital need
TotalEnergies projects that 10 billion people will
need energy in 2050 for cooking, heating, lighting, and transportation. This is the second part of URN’s series/special coverage
of Uganda’s energy transition debate. This part explains the energy transition
in the context of Uganda’s oil and gas resources. Should Uganda’s oil remain in
the ground? Will it be profitable?