Pitch
AN ENVIRONMENTAL CONSERVATION APPROACH TO HANDLING OIL AND GAS IN UGANDA TO ACHIEVE MULTIPLE SDGs
Description
Summary
INTRODUCTION:
Uganda confirmed the existence of commercially viable oil deposits in the Albertine region in 2006. To date, 6.5 billion barrels of oil have been discovered with 1.4 to 1.7 billion barrels recovery rates, a 500 billion cubic feet of non-associated gas and under 200 billion feet of associated gas, just from 40 per cent of the exploration.
Oil is considered a blessing and at the same time a curse in different countries depending on how it’s handled. Properly management of the resource has cause overall development in many countries and improper handling has led to devastating effects.
Oil exploration and production has a number of positive effects on the economy but also comes along with negative impacts on the environment if not handled well.
Uganda is aiming at becoming a middle income country by 2040 and we are focusing on the oil resource commonly referred to as ‘the black gold” a key contributor to attaining multiple SDGs. Fully production is set to commence in 2020, but he country has so far received USD 709,039,687 from Petroleum related activities.
Uganda’s (brent) crude oil has low sulphur content making it heavy, waxy and solidifies at room temperature, requiring the heating of the pipeline to keep it at above 50 degrees celcius for it to flow through.
At full production, the fields are expected to produce up to 230,000 barrels a day. Tullow estimates the cost of production at $25 a barrel. Uganda expects to earn USD 3-3.5 billion dollars annually from the resource.
SUMMARY OF THE PROPOSAL- (ATTAINING MULTIPLE SDGs THROUGH TRANSFORMATION OF THE ENERGY SECTOR)
Many strategies need to be implemented but below is a summary of the key proposals.
- Infrastructure development
- An environmental conservation approach to ensuring access and affordability of fuel
- Multiple partnerships for financing of projects
- Efficient Management, Transparency and accountability| Fighting corruption
Environmental conservation Policies in the oil and gas sector
Proposals
A global solution for decarbonizing energy systems
Migrate resources from fossils to CO2 life-cycle management and remediation
Fossil Fuel Extraction and the Burden of International Security!
What actions do you propose?
Attaining multiple SDGs involves a designing and implementing a number of strategies which yield different results in different situations and places. An assessment of the available resources together with those that will be needed has to be done before adopting a strategy.
A cost benefit analysis needs to be done before initiation and implementation. Cost Benefit Analysis provides a framework to identify, quantify, and if possible, monetize all impacts of a project or policy (including their environmental and financial impacts). This process enables the comparison of losses and gains of a project or a policy using a measurement that all stakeholders can relate to – generally monetary terms.
AN ENVIRONMETAL CONSERVATION APPROACH TO ENSURING ACCESS AND AFFORDABILITY OF FUEL
There is a correlation between energy consumption and level of development. The more developed countries tend to be the highest users of energy, for example: the USA, which has about 5% of the world’s population, consumes about 25% of the world’s oil.
Oil prices and availability affects many sectors, e.g. transport, industrial production, the plastic and petrochemical industry, finance, home lighting and cooking, etc.
The most important measure in the energy balance of Uganda is the total consumption of 2.70 billion kwh per year, per capita is about 65kwh per person. Comparing with other countries: UK has per capita energy consumption of 2764 kwh per person, USA has 6801 kwh per son, Australia 5490 kwh per person.
Availability of subsidized oil for locals will help foster growth in other areas of the economy.
India, the world’s 3rd largest oil consumer and having a GDP growth of 6.7%, GDP rank of 6th(nominal) and 3rd(PPP) views kerosene as the “poor man’s fuel” and heavily subsidizes it to half it’s ‘market value’. Together with LPG, it’s meant to be for cooking and lighting to reduce the burning of wood, dry leaves & agricultural waste.
In 2016, annual average Energy, Fuel and Utilities (EFU) inflation increased to 3.9 percent compared to 3.5 percent recorded for the year 2015 calendar year.
The rising energy costs together lack of access to the little available energy leads to the low per capita energy consumption (65.08kwh per person per year) and forces many to go for cheaper options like firewood and charcoal. Uganda is far below the world per capita energy consumption of 75 million BTU or 21,980 kwh per person, per annum.
More than half of the households in Uganda (58 percent) cook in a building separate from the house, while about one-third (28 percent) cook outdoors. In urban areas, one in five households (22 percent) cooks indoors.
Cooking and heating with solid fuels leads to high levels of indoor smoke consisting of a mix of pollutants that can increase the risk of contracting respiratory infections. Solid fuels include charcoal, wood, straw, shrubs, grass, agricultural crops, and animal dung. In Uganda 96 percent of households use solid fuel for cooking, in rural households at 98 percent and very common in urban households (85 percent). Wood is the main type of fuel used for cooking in rural areas (85 percent), while charcoal is the most used cooking fuel in urban areas (68 percent).
As a result, there is an average decline forest cover in Uganda by 5.42 percent per year.
Forest cover reduced significantly by 46.9 percent over a period of 20 years, woodlands cover declined by about 37 percent between 2005 and 2010, total forest cover declined by 27 percent between 2005 and 2010,
The use of natural gas and oil will become a much safer and efficient fuel for cooking and heating. In the long run, forests will be conserved as their won’t be any more need to cut trees for charcoal and firewood. Greenhouse gas emissions will also be reduced in the long run.
All Rivers in Africa combined have a potential of generating approximately 300,000 megawatts of hydro electric power yet by 2020, Africa will have a total of approximately 1.3 billion people. The United States alone which has less than 400 million people produces more than one million megawatts of electricity because of its use of more yielding technologies including, petroleum (22%).
A sustainable forest management strategy that aims at reducing deforestation and forest degradation while ensuring that more trees are planted in much of the unused land.
This will include an emphasis on planting of fruit trees to provide food(fighting hunger), create employment and improved living(SDG8), acting as carbon sinks to preserve the environment (SDG13), some of these trees provide herbs as medicine(achieving SDG3) and overall sustainable development.
INFRASTRUCTURAL DEVELOPMENT
Infrastructural development affects all sectors of the economy and the oil and gas revenue will be able to help us achieve this. Uganda is highly dependent on agriculture:
According to 2014 Housing and population census figures released by the Uganda Bureau of Statistics (UBOS), two in every three persons in Uganda are in subsistence farming and only 2.5% of the working population aged 14-64 is either professionals or technicians.
46% of urban dwellers are engaged in agricultural activities with 90% of rural households engaged in agriculture.
75% engage in crop growing, 57.6% livestock farming and 66.9% in mixed farming.
Subsistence farming is the main source of household livelihood at 69% and only 16% reported that employment income was their main source of livelihood.
With good infrastructure will be enable farmers access markets, those in urban areas will have access to food from the villages, clean water & sanitation will be availed, industries will be promoted, jobs created & people’s health improved.
The fuel will also be used in power plants for example Nzinzi which will foster growth of industries and productivity of factories.
Presence of oil in the Albertine region, has led to the following infrastructural development:
- Uganda Petroleum Institute in Kigumba-Western Uganda has been setup to train personnel in petroleum related skills. Plans are underway towards the elevation of the institute from a vocational school to an international. Students from here are taken to Trinidad & Tobago for further training.
- A new road has been constructed to improve transport in the region.
- Construction of the 29 sq km refinery in Hoima
- Construction of the 100 Megawatt thermal power plant in Hoima, using heavy fuel oil as raw material to provide electricity in the region
- Construction of the 1,443km Uganda-Tanzania crude a.k.a the East African Crude Oil Pipeline (EACOP) to transport crude oil from Uganda to Port of Tanga, Tanzania on the Indian Ocean.
- A new airport is being planned
- A new hospital has been constructed in the region by Tullow Oil
MULTIPLE PARTNERSHIPS FOR FINANCING
The oil and gas industry requires a lot of expertise& financing. It’s going to cost the country billions of dollars for both the downstream and upstream activities. Uganda’s GDP is only 25.53 billion USD and it’s not sufficient to cover the country’s budget. This calls for need to partner with international oil companies and nations to carryout projects successfully.
Regarding the refinery, General electric is expected to take up to 50%, J&K Minerals Africa to own 10%, Uganda Refinery Holding Company 19.5%, Total SA of France, National Oil Company of Kenya 2.5%, Tanzania Petroleum Development Corporation 8%.
The USD 4 Billion oil pipeline will mainly be financed by French oil company Total S.A.
Tullow oil is helped in the funding of a new health facility in the oil rich district od Buliisa. This health facility will contribute towards long term improvements in the quality of life for the local communities in Buliisa.”
Over the last 10 years Tullow has invested over $12million in community projects that include primary schools in Kaiso and Sebagoro, a health centre in Kyehoro, an Enterprise Development Centre in Hoima and a Community Centre in Buliisa.
The Tullow Group Scholarship Scheme (TGSS), administered by the British Council on behalf of Tullow, is aimed at bridging the skills gaps in the oil & gas sector within the countries in which Tullow operates including Uganda.
EFFICIENT MANAGEMENT, TRANSPARENCY AND ACCOUNTABILITY| FIGHTING CORRUPTION
In many countries, oil has been said to be a curse due to improper management, lack of transparency, poor accountability and the nations have suffered severely. We advocate for transparency and corruption free management of the resource we believe will help us come out of poverty and also help us achieve multiple SDGs.
Transparency & accountability are central issues in Natural resource Management and thus should be cherished. Transparency is the relationship between three rights: the right to access information, the right to participate in decision making and the right to challenge such decisions. All this must be done in line with international conventions & World Bank operational policies.
The revenue must be managed and utilized in an appropriate way.
Multiple independent and interdependent agencies and authorities have been set up to supervise and handle different oil & gas related duties to ensure efficient management, transparency & accountability. These include; The Uganda Chamber of Mines and Petroleum, The National Oil Company, The directorate of Petroleum, The Petroleum Authority, The Directorate of Energy resources Development, Directorate of Geological Surveys and Mines.
NGOs & CSOs like Transparency International, DGF, ACCU, Global Rights Alert & many others are checking government actions to ensure transparency and the fight against corruption.
Legal and policy framework has been put in place to properly manage the sector. This includes;
- The Petroleum (Exploration, Development and Production) Act 2013
- Petroleum(Refining, Conversion, Transmission and Midstream Storage) Act 2013
These are to work alongside the Uganda Constitution and laws like the PPDA Act, URA Act, the Budget Act, Accountability Act, Whistleblowers’ Act, etc.
ENVIRONMENT CONSERVATION APPROACHES TO HANDLING THE OIL AND GAS SECTOR.
The National Environment Management Authority (NEMA) is in charge of ensuring that all activities done by all sectors in the country is in line with both local and international environmental conservation policies and guidelines.
Through NEMA, we shall ensure that the environment is preserved as oil and gas exploration & production is being done and reap the results therein, which include but not limited to: climate change adaptation, avoid increasing green house gas emission, ensure favorable conditions for food security, reap the results of tourism, fight global warming, preserve life on land, air and water and finally enjoy the beauty of a green environment.
Who will take these actions and which types of actors are involved?
Government: Key government entities include: Ministry of energy, Ministry of lands, Ministry of Finance, Ministry local governments, Ministry of Transport.
Civil Society Organization are necessary to monitor government. They advocate for contract & revenue transparency by asking government to avail information to CSOs and public regarding expenditure as required by the Public Finance Management Act 2015.
International Oil companies: The government of Uganda has so far signed production Sharing Agreements with CNOOC, Total E&P & Tullow oil. These are in charge of the exploration and production of Uganda’s oil. Government is also negotiating 5 PSAs with 3 oil companies, i.e. Oranto Petroleum International Ltd, Waltersmith Petroman Oil Ltd & Armour Energy.
National Oil Company: Has members appointed by the president but it’s role and impact is yet to be substantially felt given the short time for which it has been fully operational.
The Petroleum Authority: Is charged with monitoring & regulating exploration, development & production of petroleum in Uganda.
Minister of Energy is in charge of granting and revoking licenses, guided by the National Oil and gas policy and the Petroleum Revenue Management Policy
Private Sector will be one of the key users of the improved technology and maximum cooperation will be needed form them.
Judiciary is in charge of settling all disputes arising from compensation or contract breach related issues.
NEMA- The National Environment Management Authority will be in charge of ensuring that all activities and policies are in line with the national and international environment laws and guidelines.
Where will these actions be taken and how could they scale?
These actions will be taken in Uganda and Tanzania and majority of the activities will be carried out in the Albertine region of Uganda. The key exploration districts include Hoima, Kibaale, Kiryandongo, Masindi and Buliisa.
The refinery will be built on a 29 sq km(11 sq mi) piece of land in Kabaale Township, buseruka sub-county, Hoima.
The oil pipeline will start in Buseruka sub-county, Hoima District, in Uganda's Western Region. It will travel in a general south-easterly direction to pass through Masaka in Uganda, Bukoba in Tanzania, loop around the southern shores of Lake Victoria, continue through Shinyanga and Siginda, to end in Tanga, a distance of approximately 1,410 kilometres (880 mi).
In addition, specify the countries where these actions will be taken.
Uganda
Country 2
Tanzania
Country 3
Kenya
Country 4
Rwanda
Country 5
Burundi
Impact/Benefits:
What impact will these actions have on reducing greenhouse gas emissions and/or adapting to climate change?
REDUCING GREENHOUSE EMISSION AND THE CARBON FOOTPRINT
Carbon footprint is defined as the total set of greenhouse gas emissions caused by an individual, event, organization, product, expressed as a carbon dioxide equivalent. Uganda’s total carbon footprint is 2.70mt and the per capita carbon footprint is 0.07t. Comparing with that of Europe, which is about 8.03t, ours seems a bit less because Uganda is less industrialized but this value is increasing on an annual basis due to different factors many of which are deliberate human activities.
But with the proposed strategies, green house emission levels and the carbon foot print will be contained not to rise above the current level but at the same time increasing productivity and efficiency. The improved technology and energy will eliminate the need to destroy forests and vegetation as a means to get fuel.
This will help us achieve SDG 13, 7, 9, 12, 14 and 15.
What are the most innovative aspects and main strengths of this approach?
IMPROVED WELFARE & STANDARDS OF LIVING due to increase in revenue in the country. This will help us end poverty, create decent work, provide clean energy etc.
ACCESS TO IMPROVED, BETTER AND SAFER ENERGY will be ensured. This will increase efficiency & productivity in industry, innovation & infrastructure.
FORWARD & BACKWARD LINKAGES associated to oil & gas exploration & production will lead to overall growth of the economy.
ADDRESSING THE SOCIAL ECONOMIC DISADVANTAGE of women since many of them uses charcoal & other solid fuel to cook for themselves & their families.
IMPROVED INFRASTRUCTURE in the oil rich region including the construction of a new airport, hospital, refinery, pipeline & the Nzizi Power station, a 52 megawatt thermal plant, using natural gas & heavy fuel oil as raw material.
REDUCING GREENHOUSE EMISSION AND THE CARBON FOOTPRINT through providing a substitute to charcoal& firewood. This will help us achieve SDG 13, 7, 9, 12, 14 and 15.
A sustainable forest management strategy
Costs/Challenges:
What are the proposal’s projected costs?
- A lot of the project funding is to be done by international oil companies like CNOOC, Total and Tullow Oil.
- The Uganda government together with neighboring countries like Kenya, Tanzania, Rwanda & Burundi are to also do part of the financing
- Much of the data available in Uganda and Africa is unreliable and in many times unavailable making project implementation, monitoring & evaluation hard because we need clear & accurate data & information to make evidence based decisions. More resources are being invested in research. 95% of all research done in Uganda is carried out by Makerere University and the institution is the leading research centre on the continent.
- Shortage of skilled personnel in the energy & gas sector has caused us to invest in starting up the Uganda Petroleum Institute in Kigumba-Western Uganda in 2009 to train personnel in petroleum related skills. I 2011, increased budgetary allocations were made towards the elevation of the institute from a vocational school to an international University and US$ 8 Million will be sought from World Bank and Irish Aid to achieve this goal.
- Construction of the 29 sq km refinery in Hoima will cost an estimated US$ 4.3 billion.
- Construction of the 100 Megawatt thermal power plant, using heavy fuel oil as raw material to provide electricity in the region is estimated to cost US$170, of which 15% will be contributed by the government of Uganda.
- Construction of the 1,443km Uganda-Tanzania crude a.k.a the East African Crude Oil Pipeline (EACOP) to transport crude oil from Uganda to Port of Tanga, Tanzania on the Indian Ocean is estimated to cost US$ 4 billion. Completion is planned for 2020.
- Legal battles and compensation are a key cost.
- Subsidization of fuel (kerosene) and natural gas to an ‘affordable’ level will cost the country . This will cost the government at least UGX 1240 per liter.
- Massive expense will be needed to educate the masses regarding the use and disposal of petroleum products like polyethene
- The government will need to spearhead the funding for every household to plant at least one tree every two years
About the Authors
Mubazi Eric is co founder of Iwat Solutions, a technology company in Uganda that mainly develops software for corporate companies and IT consultancy services.
Eric is also the founder of Shaping Destinies (SHADE), an organization that advocates for an environmental conservation approach to handling key issues of national importance. The organization also works with Most At Risk Populations (High risk groups) in the fight against HIV, poverty and hunger.
References
- UGANDA BUREAU OF STATISTICS
- www.tullowoil.com
- UGANDA POPULLATION CENSUS
- UGANDA HOUSEHOLD SURVEY
- UGANDA DEMOGRAPHIC AND HEALTH SURVEY 2011
- WORLD BANK
- UN Environment
- WORLDDATA.INFO/AFRICA/UGANDA/ENERGY-CONSUMPTION.PHP
- UGANDA PANEL SURVEY
- https://www.ft.com/content/e057c978-1555-11e7-b0c1-37e417ee6c76
- DIRECTORATE OF PETROLEUM http://www.petroleum.go.ug
- UNVEILING PETROLEUM REVENUE FLOWS BY TRANSPARENCY INTERNATIONAL UGANDA & DGF
- GLOBAL RIGHTS ALERT
- UNCCE-LEARN
- UNITAR
What enabling environment would be required in order to implement this proposal?
Active participation of all sectors, i.e public & private, formal & informal, government, NGOs, and the indigenous people.
Government acknowledgement and involvement in the entire process of climate change adaptation and mitigation is the most important factor to be considered since they are the key decision maker regarding policy, incentives, legislation, implementation and financing of all projects and proposals.
Uganda has embarked on a massive campaign to plant trees and the natives need to cooperate with the government to ensure the success of the mission.
This is to take care of the forest degradation and deforestation and to act as carbon sinks in the long run.
It is estimated that forests absorb between 10 and 20 tons of carbon-dioxide per hectare each year.
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