IN a bid to stimulate the debate on Uganda’s newly discovered oil and the
sharing of the oil wealth, Business Vision runs a series of articles by Professor Kasozi, the director of the National Council for Higher Education. In this week, he is foccussing on when the oil was discovered in Uganda.
Reading various reports, the impression is that oil in Uganda has just been “discovered”. The term discovered is, to me, derogatory. It implies that the knowledge the locals living in the area, and for generations have known such a feature, does not matter.
This article is meant to trace the knowledge of the existence of oil in Uganda. It is important people know their past for a good future.
The utilisation of oil on a commercial basis is going to change the structure of Uganda society almost as much as the growth of cotton and coffee did in colonial and early independent Uganda. The comforting feature in the long search for commercially viable oil is that the exercise has been peaceful – so far.
When was oil discovered in Uganda? This is a question few of us can answer. What is clear is that the people who lived in the geographical area where it existed knew the existence of oil for a long time, probably in pre-colonial times.
A. Crawley, the Director of the Uganda Geographical Survey Department in the latter part of colonial Uganda, wrote a report on oil in 1956 and states that “the existence of oil seepages and gas emanations in the Lake Albert depression has long been known”.
This statement was contained in a report for the government written by N.Harries, J.W Pallister and J.M Brown published in 1956.
In his book on oil in Bunyoro entitled “Demystifying Oil Exploration in Uganda” published in 2008, Henry Ford Miirima says the existence of oil in the Lake Albert depression was known to the locals as far back as 1909. He does not cite the source of this information.
Therefore, pinpointing the exact date of the “discovery” of oil in Uganda is difficult. John Wayland, a geologist who traveled all round Uganda on foot and mapped almost all hills, mountains, valleys, rivers and lakes and– virtually – determined their physical nature, visited the area in 1919. He recorded 52 hydrocarbon occurrences around Lake Albert. He was the first to minute its existence on paper in 1920 and followed it up with the 1925 report “Petroleum in Uganda,” min. no. 1 Geological Survey (out of print). John Wayland was also the first person to refer to the “discovered” substance as “Petroleum”.
Can we therefore assume that Wayland “discovered” oil in Uganda? If so, why did prospecting continue after 1920? As he never discovered or confirmed the existence of commercially viable oil, giving him all the credit is premature. Discovery of oil is, in many cases, a process of knowledge accumulation where each bundle of resolved problems adds to the knowledge of the nature of the substance being sought. This has been the case for Ugandan oil.
Indeed, after Wayland’s publication, interest in exploiting “petroleum” on a commercial scale peaked. In 1920 alone, six entities applied and were given concessions to prospect for oil. These included W. Brittlebank, Chijoles oil Ltd, Lord Drogheda Syndicate, Messrs. Bird and Co. and Messrs E.S Grogan and Co. Each of these were given exclusive rights of prospecting in areas ranging from 56 to 4,000 square miles. However, none of them “discovered” oil that was sufficient for commercial purposes. But future prospectors learned a lot from the ashes of their failures.
By 1925, the colonial Uganda government was ready to accept more applications from prospectors. In 1926, the Anglo-Persian Company applied for the exclusive right to explore, prospect and extract oil.
However, the company found it expensive to do the preliminary geophysical work and carry out explorations. It suggested to the government for a joint sharing of financial responsibilities. However, not wishing to put taxpayers’ money at risk, the government declined. In 1930, the company halted its activities.
But, interest in exploiting Uganda oil by private companies and individuals continued. In 1936, the African and European Investment Company of Johannesburg was granted an exclusive licence over an area of 1,384 square miles of the flats of the Rift Valley in 1936 and 1,190 square miles within the lake itself in 1937. The company tested a number of places, drilled two wild cats (potential wells), studied soils and rocks in the area but failed to strike commercial oil. In 1940, the company decided against further drilling and gave up its licence in that year. During the war years, 1939-1945, there was not much activity in exploration for oil.
However, colonial government officers realised that geological evidence and data collected by failed attempts pointed to the presence of commercially viable oil in the western East African Rift Valley, particularly the Lake Albert area. After the failure of the Johannesburg-based company mentioned above, the Geological Survey Department acquired a light rotary machine to continue explotary drilling for oil especially on the promising Kibuku seepage area.
Thus, between 1947 and 1950, geologists R.C Pargeter, F.R Wilson and D.M Boyd continued to survey the area, producing the many reports on the subject that should be in Uganda’s National Archives at Entebbe. The neglect of the National Archives has exacerbated the lack of knowledge on this and others.
The few records I have been able to look at indicate that the colonial government halted further surveys of commercial oil exploration in 1951 after Boyd’s failure to find it near the Kibuku seepage.
The search for commercial oil was not a major priority in Uganda’s period of chaos (1966-1986). However, there were occasional attempts to attend to the issue. In the early Amin period, Lt. Col Erinayo Oryema is reported to have signed an agreement with a French entity on behalf of Amin for prospecting oil.
Under the Obote II regime, some activities to enhance knowledge on oil were conducted. In 1983, an aeromagnetic survey was conducted over the entire western Rift Valley of Uganda and Zaire (now DRC).
Its results improved knowledge of rocks, soils and hydrocarbons over what was previously known. In 1985, the Petroleum (Exploration and Production) Act was enacted. This Act deals with mainly the exploration and extraction of oil.
It does not fully address downstream activities such as refining, the use of gas, the utilisation and distribution of oil revenues, benefits for local people, participation in decision making by citizens and the massive social impact on the environment and social structures that the extraction of the oil generates.
ACODE and other entities have recommended a number of amendments, additions and other legislations to make the Act better and harmonise it with the 1995 constitution.
Commercially exploitable oil has been “discovered” or landed on by prospecting companies in the NRM period, starting from 1997. The NRM signed a number of Production Sharing Agreements (PSAs) with companies to extract oil. As per law, these are secret.
The companies include Tullow Oil, Heritage Oil, Neptune Petroleum and Dominion Petroleum. Some 10 exploration areas have been earmarked and licensed to the various companies. These areas include the Rhino Camp Basin, Pakwach Basin, Lake Albert Basin, Semiliki Basin (EA 3A,3B,3C and 3D); and Lake Edward/George Basin (EA,4A,4B and 4C). Countries that lack the expertise and capital to exploit their mineral resources and decide to invite foreign companies to assist in development often use PSAs.
In PSAs, the country’s government awards the execution of exploration and production activities to an oil company. The oil company bears the mineral and financial risk of the initiative and explores, develops and ultimately produces the field as required.
When successful, the company is permitted to use the money from produced oil to recover capital and operational expenditures, known as “cost oil”. The remaining money is known as “profit oil” and is split between the government and the company typically at a rate of about 80% for the government and 20% for the company. In some PSAs, changes in international oil prices or production rate can affect the company’s share of production.”
In the past, however, especially before the 1960s when Indonesia first used PSAs, companies extracted oil and other minerals under concessions. A concession is a territory within a country that is leased, snatched from or given to another entity for administration or economic exploitation.
The previously owning state, usually a weaker one, surrenders its sovereignty over the subject enclave territory or island to a company or country in return for cash, a percentage of revenue, or protection of the ruling elite against local competitors for power or other strong neighbours. As the era of naked imperialism became less fashionable, so did territorial concessions as a method of mineral extraction agreements.
The current government of Uganda has contributed enormously in enhancing the knowledge of the presence of commercially exploitable oil in Uganda.
First, there has been more success in locating oil than was the case in past searches for commercially viable black gold. Since 2002, the various companies licenced have had a 95% success in the wildcats they have sunk. I understand that 32 of the 34 wildcats have qualified to be called wells.
Secondly, the amount of oil believed to be underground is impressive. Estimates put discovered amounts at two billion barrels of oil.
Lastly, the Ministry of Energy is working hard to improve or put in place legislations that would cater for changed oil and gas circumstances and to eliminate legal contradictions, for example between the 1985 Petroleum Act and the country’s 1995 constitution.
In light of the above, no one single date can be recorded as the time when oil was discovered in Uganda. The presence of oil was known to the residents of the area before 1909 (Mirima) and recorded officially in 1920 by John Wayland.
From that time on, a number of people knew there was oil around Lake Albert. But it has been in the NRM period, from 1997 to the present, that the presence of commercially viable oil in the region has been confirmed. Both the companies and the government should decide the date of this confirmation. The public and scholars need to know that date for the sake of knowledge.
An interesting addendum to the story of oil in Uganda is that it has been a legacy of peace. So far, no blood has been spilled in the struggle for the search and control of this oil. The land rush into Bunyoro near oil wells that many of us feared would happen seems to have been contained.
Prof Kasozi is the Executive Director of the National Council for Higher Education
