THE discovery of oil in Uganda promises to dramatically transform the economic landscape of the country and the East African region as a whole. The potential impact on government revenue is substantial, offering a significant opportunity for Uganda if the proceeds are wisely invested in critical areas such as infrastructure development, agricultural modernization, and human capital enhancement.
With approximately 1.4 billion barrels of Uganda’s 6.5 billion barrels of proven oil reserves estimated to be economically recoverable, the country stands on the brink of a major economic shift. These reserves, primarily located along the western border with the Democratic Republic of Congo, represent just the beginning of Uganda’s oil exploration journey.
Reuters reports that Uganda is now expanding its search for oil into two new regions, which could potentially increase the country’s already significant proven reserves. Energy Minister Ruth Nankabirwa announced that government geologists are conducting preliminary petroleum exploration studies in the Moroto-Kadam Basin and the Kyoga Basin, located in the country’s north and northeast respectively.
“Early results suggest the potential for commercial oil and gas in the Moroto-Kadam Basin,” Nankabirwa stated at a press conference in Kampala. This development is particularly noteworthy as Uganda has identified five basins with suspected hydrocarbon potential, but until now, only the Albertine basin has been successfully explored.
The Albertine basin houses two major oil fields, Tilenga and Kingfisher, which are majority-owned by TotalEnergies (56.7% stake), with China’s CNOOC and Uganda’s national oil company UNOC holding the remaining shares. However, commercial production has faced delays due to various factors, including disagreements over field development strategies and taxation, as well as infrastructure and funding challenges.
Despite these setbacks, progress is being made. Nankabirwa revealed that 72 out of 457 planned wells have been drilled in the Tilenga and Kingfisher oilfields. Additionally, oil firms have submitted plans for a liquefied petroleum gas (LPG) facility, for which the government intends to issue a license.
The development of the East African Crude Oil Pipeline (EACOP) is another crucial component of Uganda’s oil strategy. The government is currently awaiting a decision from potential Chinese funders, including EXIM bank and SINOSURE, regarding credit for this 1,445-kilometer pipeline project, which will facilitate the export of Ugandan crude through a port on Tanzania’s Indian Ocean coast.
As Uganda continues to explore and develop its oil resources, the potential for economic growth and regional development remains significant. However, the success of this venture will largely depend on effective management and strategic investment of the resulting revenues.
