''Uganda's unpredictability hurting oil and gas prospects''

By Billy Rwothungeyo                                            

KAMPALA - The snail-paced developments in the oil and gas industry is affecting Uganda’s competitiveness in the industry, says Eric Olanya, the Head of UK Trade and Investment at the British High Commission in Kampala.

“The constraint that companies are facing, which is very specific to Uganda, is that the environment is so unpredictable. I am not talking about the politics and security. I am talking about when things will happen,” he said.

“Companies have been here for six years and are asking, is this the right time to begin hiring staff? Is this the right time to start hiring staff?”

Olanya made the remarks at an education exhibition recently organised by the British Council. The exhibition at the Sheraton Kampala Hotel focussed on the Oil and Gas Sector.

“I have been watching this industry closely for the last six years. It has been slow, from an international company perspective, projects are capital intensive, and these companies invest and look to get a return in the next 10, 20 or even 30 years,”

Olanya reasoned that because the capital that these oil companies use is expensive, the business climate has to be enabling.

 “That means that the investment environment has to be conducive. For a company to spend money they have to be sure of the readiness of the country, how the country fares in international rankings of doing business and so many things,” he said.
 

Evergreen burner burning the already tested oil and gas at Kasemene oil well in Bulisa district in 2009. (Cortesy photo)

After a long period of waiting by private sector players, authorities in Uganda opened up blocks for licensing in February. It is expected that the licenses will be awarded before the end of this year.

The blocks up for grabs are Mvule (344 Sq.Km) in Moyo/Yumbe; Taitai and Karuka (565 Sq.km) in Buliisa; Ngassa (410 Sq.Km) in Hoima; Kanywataba (344 Sq.Km) in Ntoroko district and Ngaji (895 Sq.Km) which runs through the districts of Rukungiri and Kanungu districts.

Uganda is yet to start oil production, almost a decade since the first commercially viable oil deposits were confirmed in 2006, much to the chagrin of oil companies.

The UK’s Tullow Oil is among the three major players waiting for production to start alongside Total and China National Offshore Oil Corporation (CNOOC).