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Great expectations in Uganda over oil discovery

Uganda is on course to become one of the top 50 oil producers in the world. But will the proceeds change the lives of the country's poorest?

From the Katine Project*, guardian.co.uk
Wednesday 2 December 2009
Great expectations in Uganda over oil discovery
By Richard M Kavuma

When Martin Eceku, 62, from Katine, in north-east Uganda, found out that oil had been discovered on the country's western border, he says the find could reduce transport costs in the region. And if jobs are created in the oil industry, perhaps children from the sub-county could head west for work. He recalls the period of Kenya's post-election violence in early 2008, when fares for the 30-km journey from the health centre in Katine to the nearest town of Soroti town shot up from UShs 2,000 to UShs 10,000.

Eceku, who suffers chronic chest pains, has not made the connection between oil, government revenues and how it has the potential to improve his life, and that of the poor service delivery in much of rural Uganda. This financial year, Katine's budget for developmental activities works out to be around $2.30 for each of the estimated 30,000 residents. The main Tiriri health centre is under-staffed and often suffers shortages of essential medicines.

But it's a connection that is being made many Ugandans.

Economically, these are interesting times for the 30 million people living in Uganda.

In October 2006, Uganda confirmed it had struck oil, after more than 80 yeas of official suspicion.

The president, Yoweri Museveni, who once described himself as "not a very religious person", held a national prayer ceremony where he thanked God "for having created for us a rift valley 25 million years ago", and the successive layers of vegetation that had turned into good quality petroleum. The president also thanked God for giving "us the wisdom and foresight to develop the capacity to discover this oil".

Three years later, on October 9, as Uganda marked 47 years of independence from Britain, Museveni's national address was less about God and more about his certainty about the future.

"No one, in Uganda or internationally, can now doubt the country's steady and deliberate path to a middle-income country status in the near future," he said in Kampala. "This is more so with the reasonable discoveries of oil, which, without any doubt, will accelerate our progression to middle-income country status… With the recent discoveries of oil in western Uganda, the country's prospects for domestic revenue and self-reliance in financing public investments and programmes are much brighter today than any other time in the past."

Museveni's buoyancy is well-founded. Exploration companies have confirmed hundreds of millions of barrels of oil in the Albertine Graben region – some 23,000sq km along Uganda's border with the Democratic Republic of the Congo (DRC). Officials from Tullow Oil, the most dominant of four companies with exploration licenses, recently revealed that their find alone – 800 million barrels – could yield more than 100,000 barrels of oil per day for anywhere between 15 to 30 years. Given that exploration has so far covered only a third of the Albertine Graben area, a senior government geologist recently told the government-owned New Vision newspaper that Uganda's extractable deposits should be in excess of 2 billion barrels.

Uganda currently needs only 11,000 barrels of oil per day, which means there would be a lot of potential to export.

Tullow officials estimate that at present prices, Uganda's oil would be worth some $2bn per year, which amounts to around two-thirds of the country's budget for the current financial year.

And with the Italian oil Eni announcing last week that it is buying a stake in two exploration blocks in the country, predictions are now that Uganda could soon become one of the top 50 oil producers in the world. Click here to read full story.

*What is the Katine project?

The Katine project

The Guardian is tracking Amref's three-year development project, in partnership with Barclays, to improve the lives of the 25,000 people in Katine sub-county in Uganda. We'll explain where donations go, how aid works, and how lives are changed
Contact us: Katine.editor@guardian.co.uk