THE REPUBLIC OF UGANDA

MINISTRY OF ENERGY AND MINERAL DEVELOPMENT

THE OIL AND GAS SECTOR IN UGANDA: FREQUENTLY ASKED QUESTIONS

JANUARY 2017

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FOREWORD
The Ministry of Energy and Mineral Development is glad to present this booklet on Frequently Asked
Questions on the Oil and Gas Sector in Uganda.

The journey to confirm the existence of commercial petroleum resources in Uganda started during the
colonial days. Oil seeps were mapped and documented and thereafter wildcat shallow wells were drilled
in Kibiro (Hoima), Butiaba (Buliisa) and Semliki valley based on these seepages. These efforts were,
however, interrupted by the Second World War and later by colonial policy which zoned the East African
region for Agriculture. The political turmoil that existed in Uganda in the 1970s after Independence did
not make Uganda an attractive investment destination for petroleum exploration.

In the mid-1980s with stability returning to the country, more consistent efforts were undertaken
including data acquisition by Government geoscientists, packaging the data for promotion, capacity
building and institutional development. These efforts were successful as international oil companies
were attracted to invest in petroleum exploration in Uganda in the late 1990s.

The year 2006 became a milestone when on 6th January 2006, the Mputa-1 well struck oil and was
declared the first commercial discovery. Since then tremendous success has been recorded in the
country’s emerging oil and gas sector and various achievements made in the sector’s development.
Uganda’s petroleum resources have grown from 300 million barrels in 2006 to 6.5 billion barrels of oil in
place in 2014; the legal, policy and institutional framework for the sector has evolved; best practice
technology is being utilized in the country; and frameworks to ensure stakeholder engagement,
participation of Ugandans in the sector, environment protection and robust revenue management are in
place.

The country has now progressed from the exploration and appraisal to the development and production
phases of the petroleum value chain. Plans to put in place infrastructure such as processing facilities,
pipelines and a refinery to support production are in advanced stages. It is expected that by 2020,
Uganda will have joined the ranks of oil producing countries. For the East African region, the success in
Uganda de-risked the entire East African rift system for petroleum exploration and development.

This publication presents an overview of the petroleum industry with specific reference to the
developments in Uganda’s oil and gas sector. It is our hope that the answers to the questions presented
herein will enhance the public’s understanding and appreciation of the progress that has been made in
the sector. Government is committed to ensuring that the petroleum industry will contribute to
economic take off of our nation and create lasting value to all Ugandans.

DR. STEPHEN ROBERT ISABALIJA

PERMANENT SECRETARY, MINISTRY OF ENERGY AND MINERAL DEVELOPMENT
JANUARY 2017

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 TABLE OF CONTENTS

FOREWORD 2

GENERAL 4

COMMERCIALISATION STRATEGY 11

GOVERNMENT POLICY 14

PETROLEUM REVENUE MANAGEMENT 19

LAND USE AND COMPENSATION 21

ENVIRONMENT MANAGEMENT 22

NATIONAL PARTICIPATION 26

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GENERAL

1. Where in Uganda is Petroleum (Oil and

Gas) Exploration taking place?

Oil and Gas Exploration in Uganda is currently

taking place in the Albertine Graben (figure 1). The
Graben is part of the East African Rift System and
runs along Uganda’s western border with the
Democratic Republic of Congo (DRC). The Graben is
approximately 500 km long, averaging 45 km in
width and 23,000 square kilometres in Uganda.
Figure 1; Location of the Albertine Graben

2. What is the Petroleum Value Chain?

The Petroleum Value Chain (figure 2) is the series of activities staring from exploring for
oil to consumption of petroleum products. The Petroleum Value Chain has three major
phases, namely; upstream, midstream, and downstream.

DOWNSTREAM
UPSTREAM MIDSTREAM

LICENSING DISTRIBUTION
TRANSPORTATION
EXPLORATION DEVELOPMENT MARKETING
REFINING
APPRAISAL PRODUCTION SALES
GAS PROCESSING

Figure 2: The Petroleum Value Chain

Upstream covers exploration, development and production of petroleum together with

decommissioning. Exploration refers to the search for petroleum accumulations and
includes appraisal of the same to establish the extent (distribution) of the petroleum
accumulation below the earth’s surface and the ease of flow of the petroleum from this
accumulation. Development involves preparing for production by putting in place

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facilities and infrastructure for collection, transportation and processing of crude oil and
gas. Production is the removal of petroleum from the accumulations below the earth’s
surface to the surface, and preparing the petroleum for transportation and refining.
Midstream includes bulk transportation of petroleum commodities (crude oil and
natural gas) and products (gasoline, diesel, jet fuel, etc), refining of oil and conversion of
gas. It also includes converting oil and gas into marketable products and chemicals.
Downstream deals with distribution, marketing and sale of petroleum products. In some
countries, downstream and midstream operations are considered together as
downstream operations.

3. When did Uganda confirm commercial oil and gas

resources?

Uganda confirmed commercial petroleum resources in

2006. Efforts to find oil in Uganda started as far back as the
1920s. These efforts led to the identification of surface
seepages of oil and drilling of shallow wells around these
seepages before 1945. One deep exploration well (Waki-1)
was also drilled near Butiaba, in Buliisa district during 1938.
These initial efforts were not successful in establishing
commercial deposits of petroleum in the country. Renewed
and consistent exploration efforts commenced in the 1980s
Figure 3: Caroil 2 drilling rig
which culminated into confirmation of commercial
petroleum resources in Uganda during 2006.

4. How much oil has been discovered in Uganda?

The estimate resources in the country have increased from 300 million barrels in 2006
to 2 billion and 3.5 billion barrels in 2010 and 2012 respectively. As at June 2016, the

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discovered resources in the country were estimated at 6.5 billion barrels of oil
equivalent in place with about 1.4 to 1.7 billion barrels of these resources recoverable (1
barrel is equivalent to 159 litres). The area explored presently represents less than 40%
of the total area with the potential for petroleum production in the Albertine Graben.
There is therefore potential for additional petroleum resources to be discovered in the
country when additional exploration is undertaken.

5. Can all the 6.5 billion barrels of oil in place be recovered?

Geological factors including the fact that oil in the subsurface is stored in rocks with
pores (similar to water in a sponge) and within structures, makes it impossible to
recover 100% of the resources. The amount of oil to be recovered depends on the
properties of the rock such as how the pores within the rock are connected to one
another, reservoir pressures and type of oil, among others. Globally, an average of 20 to
30 per cent of the oil in place is recovered
economically using the available technologies.
Enhanced Oil Recovery (EOR) methods are also often
used to increase the amount of oil recovered from an
oil field using different technologies to supplement
the natural production. EOR is used to improve
movement of oil in the oil field and the different
methods of EOR include polymer flooding, gas
injection, and steam flooding.

6. How many Petroleum discoveries have

been made in Uganda to date?

Twenty-one (21) oil and/or gas discoveries have been

Figure 4; Petroleum Discoveries in the Albertine
made in Uganda to date as shown in figure 4. Graben

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 7. Which oil companies are licensed in Uganda?

The oil companies currently licensed to explore, develop and produce petroleum in the
country are; Total E&P Uganda BV., Tullow Uganda Operations Pty Ltd, Tullow Uganda
Limited and China National Offshore Oil Corporation (CNOOC) Uganda Limited.

8. Who owns the oil and gas resources in Uganda?

Article 244 of the Constitution of Uganda vests the ownership and control of minerals
and petroleum in the Government on behalf of the people. The Government therefore
holds all resources in trust for the people of Uganda. The Constitution also empowers
Parliament to make laws regulating the exploration and exploitation of minerals and
petroleum. In this regard, Section 4 of the Petroleum (Exploration, Development and
Production) Act 2013 vests petroleum resources in the Government on behalf of the
people.

9. How long will the country’s oil and gas resources last?

In Uganda, at a projected peak production rate of about 200,000 barrels of oil per day, it
is estimated that the current discovered resources can last 20-30 years. The length of
time that oil and gas resources last in any given country largely depends on the amount
of discovered resources and the rate at which these resources are produced. This rate is
determined by many factors, including technical, strategic and economic reasons.
However, additional exploration and appraisal is expected to be undertaken in the
country, and this could lead to additional resources being discovered in the country,
hence prolonging this production period. It is important that these resources are
produced gradually in an efficient manner and at an economic rate that will also provide
a sustained benefit to the country.

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 10. How far in the ground does the petroleum lie?

The depth at which hydrocarbon deposits are found varies greatly around the world.
Very shallow deposits of less than 30metres were found in the early days of exploration.
Today, it is common to produce oil from more than 3,000 metres. In Uganda, petroleum
has been encountered between 290 metres and 3,000metres in the discoveries that
have been made in the Albertine Graben to date.

11. What is the quality of Uganda’s crude oil?

Different types of crude oil are produced around the world.

Two of the most important quality characteristics of oil are
its density and sulphur content. Density ranges from light to
heavy, while sulphur content is characterized as sweet or
sour. Crude oils that are light (with degrees of API gravity above 360) and sweet (low
sulphur content) are usually priced higher than heavy, sour crude oils. Uganda’s crude
oil has; API range of 170 ~ 330, with a low sulphur content but is waxy with an average
pour point of 400C and hence solidifies at room temperature. Uganda’s crude oil is
therefore described as sweet and medium to heavy.

12. What happens after a petroleum

discovery has been made?

In accordance with section 66 of the PEDP

Act 2013, when a discovery is made, the
licensee is required to notify the
Government and submit a technical
evaluation. The licensed Oil Company
appraises the discovery to determine the
Figure 5: Buliisa District leaders visiting appraisal drilling operations in EA 2
extent of the discovery and the

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characteristics of the crude oil therein by drilling additional wells (figure 5) and/or
undertaking well testing. Following completion of appraisal and interpretation of the
data acquired during appraisal, the company applies for a production licence and this
application is supported by a Field Development Plan (FDP) which details how the
company intends to produce and transport the petroleum in the discovery; and a
Petroleum Reservoir Report (PRR) that describes the technical understanding of the
reservoir below the surface. These reports are reviewed by Government and discussed
with the company until agreement is reached and a production license is issued. The
company then prepares the field for production by drilling injection and production
wells and also putting in place other surface facilities for production and processing of
crude oil.

13. What is the plan for commercialising the discovered oil and gas resources?

The National Oil and Gas Policy, 2008 recommends value addition through refining. A
Memorandum of Understanding (MoU) between Government and the Licensed Oil
Companies which provides for a commercialization plan for the development of the
discovered oil and gas resources in the country was concluded during February 2014.
The MoU provides for the use of petroleum for power generation, supply of Crude Oil to
the refinery to be developed in Uganda and export of Crude Oil through an export
pipeline or any other viable options.

14. Has commercial production of oil and/or gas started?

Commercial production can only commence following the issuance of a production

license, which authorises the holder to produce petroleum from a field whose appraisal
has been completed and development plan approved. Commercial production of
petroleum also requires putting in place infrastructure such as processing plants to
separate the crude from impurities like sand and water, pipelines for transportation of

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crude from the fields, a refinery to transform the crude into the various products such
as Diesel, Petrol, and Kerosene and facilities for the export of crude oil. These and other
infrastructure such as the road networks, water and electricity in the Albertine Graben
are being upgraded to support these developments. Full scale production has been
earmarked for 2020, after the necessary infrastructure has been put in place.

15. How much gas has been discovered in Uganda to

date?

Natural gas can be "associated gas" (found within oil), or

"non-associated/ free gas" (independent natural gas
reservoir). Associated gas cannot exist without oil in the
reservoir which doesn’t necessarily apply to free gas
reservoirs. The associated gas established in the country to
date is estimated at 170 billion cubic feet (bcf) while non-associated gas is estimated at
500bcf.

16. How can the gas resources be utilised?

The gas resources are commercially viable and can be used for power generation. In
addition, natural gas can be used for domestic purposes such as heating and cooking. It
can also be used as fuel for vehicles, the production of iron and steel from iron ore, in
fertilizer plants and as a chemical feedstock in the manufacture of plastics and other
commercially important organic chemicals. Natural gas can also be re-injected into the
reservoirs to maintain pressure to support production of crude oil through
enhancement of oil recovery. Alternatively, after processing, gas can be used for on-site
electricity generation or used as feedstock for different petrochemical industries.
Another possibility is to export natural gas as a liquid. Gas-to-liquids (GTL) is a

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developing technology that converts natural gas into synthetic gasoline, diesel, or jet
fuel.

COMMERCIALISATION STRATEGY

17. How does Government intend to commercialize oil and gas resources?

Uganda’s commercialisation strategy is focused on valuable utilization of the discovered

resources, as provided for in the National Oil and Gas Policy for Uganda. The agreed
commercialization strategy for Uganda’s 6.5 billion barrels of in place petroleum
resources (1.4 billion barrels are recoverable) includes; 1) use of crude oil and gas for
power generation, which will involve utilisation of associated gas (gas produced with oil)
to generate power to support field development and production operations; 2) Supply
of Crude Oil to a 60,000 barrels per day refinery to be developed in Uganda to meet
national and regional petroleum products requirements; and 3) export of Crude Oil
through an export pipeline or any other viable options.

18. Why is Uganda opting for development of a refinery and a crude oil export
pipeline?

Objective 4 of the National Oil and Gas Policy (2008) for Uganda is to promote valuable
utilisation of the country’s oil and gas resources through in-country refining of crude oil.
In this regard therefore, Government undertook a feasibility study on in-country refining
in 2010 and the study recommended that development of a refinery in Uganda was the
most economic option for the utilisation of Uganda’s crude oil. The refinery will also
ensure security of supply of petroleum products to Uganda. In addition the refinery will
create jobs for Ugandans, promote industrialisation while saving foreign exchange
which would have been used to import petroleum products. A crude export pipeline will
provide an alternative outlet for produced oil to ensure return on investment for the
licensees and Government. Studies on the crude export pipeline routing were
conducted and the Hoima (Uganda) – Tanga (Tanzania) route was selected as more
secure, at a cheaper cost and a lower tariff.

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 19. Where will the refinery be located?

The feasibility study recommended Kabaale Parish in Buseruka Sub County, Hoima
district as the most suitable location for the refinery. This is due to its centrality in
relation to the entire Albertine Graben, proximity to the oil fields, sparse population and
relatively flat terrain among others.

20. What is the planned size and configuration of the refinery to be developed?

A refinery with an input capacity of 60,000 barrels per day, starting with a capacity of
30,000 barrels per day will be developed. The refinery configuration and complexity
determines which products can be produced from the crude oil. The planned refinery is
expected to produce Liquefied Petroleum Gas (LPG), diesel, petrol, kerosene, jet fuel
and Heavy Fuel Oil (HFO).

21. How will the refinery project be developed?

Government has invited private sector participation in the development of the refinery.
The refinery will be developed on a Public-Private partnership (PPP). Government
embarked on a competitive process of selection of a lead investor to lead the
construction and operation of the refinery in 2013. The process involved issuance of a
Request for Qualification (RFQ) that was followed by issuance of a Request for Proposals
to six firms/ consortia that were short-listed from the RFQ stage. Four of these
submitted detailed proposals and a consortium led by RT Global Resources from Russia
was selected as best preferred bidder to be the lead investor for Uganda’s refinery
project during February 2015. However, negotiations of the Project Agreements
between Government and the RT Global Resources led consortium were halted during
June 2016 due to additional requests made by the Consortium that were not agreeable
to Government. The refinery development project is now being restructured in order to
conclude the selection of a developer during 2017. Government has also invited East

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African member states to participate in the development of the refinery by taking part
of the public shares. The Uganda Refining Holding Company that will hold Government’s
interest on behalf of the Uganda National Oil Company was incorporated as a subsidiary
and recruitment of staff is ongoing, starting with the General Manager.

22. What will be the effect of the development of the refinery on community
settlements, will some people be displaced?

The Ministry has acquired 29 sq.km of

land for the refinery. This land will host a
refinery complex, an airport, waste
management facilities and petrochemical
industries among others.

As part of this process, Government

undertook a Resettlement Action Plan
(RAP) through a consultative process
with the Project Affected Persons (PAPs)
(figure 7) for the required land during
Figure 7: Community Sensitisation Meeting during
2012. The objective of the RAP was to acquisition of land for the refinery

develop a framework for managing the loss of economic activities and livelihoods
through compensation and/ or relocation of the affected people. Following approval of
the RAP, its implementation commenced in July 2013 with disclosure of compensation
values to verified land, crop and property owners and training in financial management
and livelihood improvement to enable the PAPs put to good use the compensation
packages. Payment of compensation packages commenced in December 2013 and by
December 2016, 98% of PAPs who opted for cash compensation had received their
payments. The remaining 2% consist of PAPs who have not shown up or have rejected
the rates.

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In addition, 533 acres of land was acquired in Kyakabooga Parish, Buseruka Subcounty
for resettlement of the PAPs who opted for relocation and physical planning for this
land has been completed. Construction of resettlement houses for those who opted for
relocation is almost complete and it is expected that the houses will be handed over to
the PAPs during the first quarter of 2017.

GOVERNMENT POLICY

23. What are the Policy and Regulatory frameworks governing the country’s
petroleum sector?

A National Oil and Gas Policy for Uganda was approved by Cabinet in 2008. As part of
efforts to operationalize the Policy, new legislation for the oil and gas sector in Uganda
has been developed. The Petroleum Exploration, Development and Production (PEDP)
Act 2013; and the Petroleum (Refining, Conversion, Transmission and Midstream
Storage) Act 2013 became effective in April 2013 and July 2013 respectively. The former
repealed the Petroleum Exploration and Production Act of 1985. In addition, the
Ministry has developed regulations in line with the two Acts and these are;

 The Petroleum (Exploration, Development and Production) Regulations 2015

 The Petroleum (Exploration, Development and Production) (Health, Safety and
Environment) Regulations 2016
 The Petroleum (Exploration, Development and Production) (National Content)
Regulations 2016
 The Petroleum (Exploration, Development and Production) (Metering)
Regulations 2016
 The Petroleum (Refining, Conversion, Transmission and Midstream Storage)
Regulations 2016.

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  The Petroleum (Refining, Conversion, Transmission and Midstream Storage)
(National Content) Regulations, 2016.
 The Petroleum (Refining, Conversion, Transmission and Midstream Storage)
(Health, Safety and Environment) Regulations, 2016.

This is in addition to other sectoral laws, statutes and guidelines on Environment,

Wildlife, Water, Income Tax, Land, among others

24. What is the Institutional Frame work for the Sector?

The National Oil and Gas Policy highlights the roles of the different Government
institutions led by the Ministry of Energy and Mineral Development. In line with the
policy three key separate institutions have been created with the following roles:-

 The Directorate of Petroleum in the Ministry which is responsible for policy

making; coordinating the development of the sector; and undertake licensing and
national and capacity building among other roles.

 The Petroleum Authority of Uganda (PAU) regulates the different players in the
sector, including enforcing compliance and monitoring the operations of oil
companies.

 The Uganda National Oil Company (UNOC) as a separate commercial entity

responsible for state participation in the licences and other related business
aspects.

The detailed roles of the Petroleum Authority and National Oil Company are provided in
the PEDP Act 2013. The Boards of Directors for PAU and UNOC were inaugurated in
October 2015, and recruitment of the Executive Director and the Chief Executive Officer
respectively by the respective boards of directors together with top management was
undertaken during 2016. The UNOC and PAU are now operational.

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 25. How can the National Oil and Gas Policy and the Laws be accessed?

Hard copies of the National Oil and Gas Policy for Uganda and the laws and regulations
can be accessed from the Ministry of Energy and Mineral Development, and soft copies
from both MEMD and PEPD’s websites www.energyandminerals.go.ug and
www.petroleum.go..ug respectively. As part of the implementation of the National
Communication Strategy for the Oil and Gas Sector in Uganda, government has
developed a popular/ simplified version of the policy which has been translated into
eleven local languages, which can also be accessed as highlighted above.

26. What efforts are in place to keep Local Communities informed and enable
their participation in the sector?
The National Communication Strategy
for the oil and gas sector in Uganda
identifies communities in the Albertine
Graben as one of the key audiences for
oil and gas information since they host
oil and gas operations and
infrastructure for the developments.
Information dissemination to
communities is undertaken through
Figure 8: Buliisa Health Centre IV constructed by Tullow Oil as part
Community consultations and of CSR initiatives

sensitisation meetings before and during operations. Radio talk shows are carried out
periodically to relay information to communities in areas of operation and across the
country on topics of common interest. In addition, the Community Development
Officers based at the district and community levels are being capacity built to also
support the dissemination of information on the oil and gas sector to the communities.
Local communities supply most of the unskilled labour required during implementation

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of oil and gas activities in their areas. The Oil Companies undertake Corporate Social
Responsibility (CSR) initiatives to support service delivery in health (figure 8), education
and enterprise development, among others in the communities where oil and gas
activities are undertaken. The Ministry plans to set up regional offices to ensure easy
accessibility for the communities.

27. How and when will licensing of new acreage for exploration be undertaken?
The NOGP provides for efficiency in
licensing through competitive bidding.
The Petroleum (Exploration,
Development and Production) Act,
2013 provides for licensing of areas
with the potential for petroleum
production in the country to be
undertaken through open, transparent
and competitive bidding. Less than 10%
of the Albertine Graben is licensed.
The first competitive licensing round
for some of the areas which are
currently not licensed was announced
by the Minister for Energy and Mineral
Development on 24th February 2015.
This licensing round covers six blocks in
the Albertine Graben which already
have good data coverage. The six Figure 9: Map showing the six blocks (in red) for the 1st licensing round

blocks are; Ngassa (410 Km2) in Hoima

District, Taitai & Karuka (565 Km2) in Buliisa District, Ngaji (895 Km2) in Rukungiri &

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Kanungu Districts, Mvule (344 Km2) in Moyo and Yumbe Districts together with Turaco
(425 Km2) and Kanywantaba (344 Km2) in Ntoroko District as shown in figure 9. Four
companies, Niger Delta Petroleum Resources, Oranto Petroleum International Ltd,
Waltersmith Petroman Oil Ltd and Armour Energy Ltd, qualified and are negotiating
Production Sharing Agreements for three of the blocks (Ngassa, Turaco and
Kanywataba) with Government before the exploration licenses are issued during 2017.

In addition, the Ministry of Energy and Mineral Development is preparing to undertake

speculative geophysical surveys in the other areas of the country which have potential
for petroleum production but with little or no data coverage yet. Licensing for these
areas with little or no data is expected to be undertaken subsequently.

28. The Albertine Graben is shared with Democratic Republic of Congo (DRC);
what strategies are in place to ensure harmonised development?
The Governments of Uganda and DRC (then Zaire) signed an agreement of cooperation
in 1990, to allow for joint exploration and exploitation of resources across the border by
either country. An addendum to the agreement was signed in 2007 to provide for how
any fields falling across the border would be shared in line with the principle of
unitization. This agreement allows establishment of the percentage of the field in each
country and thereby determine each country’s share at the time of production. The two
Governments have held discussions on the ongoing work in the Albertine Graben,
exchange of technical data and visits to the Albertine Graben to understand the
exploration work, among others. It is however important to note that the discoveries
made in Uganda to date are not on the common border with DRC. The Governments of
the two countries continue to have regular dialogue to ensure harmonious development
of the resources on either side of the border.

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PETROLEUM REVENUE MANAGEMENT

29. What revenues should Government expect from the discovered petroleum
resources?
Government revenues from oil and gas include royalties, profit oil share, state
participation and taxes. These revenues are expected to increase over the years as the
company’s recoverable costs reduce.
The Production Sharing Agreements (PSAs) signed between Governments and the Oil
companies provide for the sharing of petroleum during production. The International Oil
Company (IOC) invests capital (along with the National Oil Company) in some cases.
Investment costs are deducted from production revenues in the form of cost oil. The
share of the revenues from the produced oil less cost oil is profit oil, which is shared
between Government and the licensee. Government also receives other payments such
as bonuses, royalties, duties, or taxes which are calculated on the basis of the amount of
oil produced; Government and the IOC will share profit oil throughout the entire
duration of production. Government also receives corporate tax on the IOC’s share of
profit oil.

30. How does Government determine the recoverable costs?

The Production Sharing Agreement (PSAs) provides that the financing risk for petroleum
operations is borne by oil companies. When commercial production starts, the company
receives a proportion of oil/gas production for the recovery of their costs and a share of
the profits. The PSAs set out the criterion under which these costs are determined
basing on the annual work programmes and budgets undertaken by the oil companies.
These work programmes and budgets are presented to the Advisory Committee
comprised of representatives of Government and the Oil Companies for consideration
and approval. The Auditor General audits the annual books of account of the oil

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companies and indicates approval of the recoverable costs for petroleum activities for
the period under review.

31. Who monitors the field operations of the oil companies?

The Petroleum Authority of Uganda is required to monitor and regulate all operations of
the oil companies. Prior to its creation, the Ministry of Energy and Mineral
Development deployed on-site field monitors during all company operations to among
other things ensure that the executed work programmes and budgets are in-line with
those approved and follow-up to ensure that work is undertaken in line with the
provisions of the Laws, PSAs and Regulations. The Companies submit daily reports
regarding operations, including the costs for these operations. Other institutions such
as NEMA and UWA also have field based monitors who work with the District
Environment Officers and District Community Development Officers to monitor the
Environmental, biodiversity and social aspects.

32. How will Petroleum revenues be absorbed into the economy to benefit
Ugandans?

The goal of the National Oil and Gas

Policy is to use the country’s oil and gas
resources to contribute to early
achievement of poverty eradication and
create lasting value to society.

The Oil and Gas Revenue Management

Policy emphasises the need for
Petroleum revenues to be used to Figure 10: A completed section of the 92km Hoima-Buseruka-Kaiso Tonya road
which is due to be completed during 2015.
develop infrastructure and enhance the
other productive sectors of the economy such as agriculture, tourism, manufacturing,

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education, among others. This will enable the benefits of oil revenues to be shared with
the entire population and its impact is felt even after the resources are depleted.

The Public Finance Management Act 2015, Part VIII Section 55-75 provides for among
others, the management of revenues received from petroleum resources, specifically
how these revenues will be monitored, invested, audited and dispersed to support
development. The Act also provides for sharing of revenues between Central
Government, Local Governments and Cultural Institutions. Local Governments will
receive 6% of royalties and Cultural institutions will receive 1% of royalties.

LAND USE AND COMPENSATION

33. How are Compensation rates for disturbance during oil and gas operations
determined?

Acquisition and/or use of land for petroleum operations is in respect of the rights of the
land owners and obligations provided for in the country’s laws.

Compensation rates for crops, trees and other non-permanent property are determined
by the district land board and approved by the Chief Government Valuer in the Ministry
of Lands, Housing and Urban Development. These rates are reviewed to ensure equity
and that they are in line with prevailing market prices. Land is valued based on the
market rates as provided for in Section 77 of the Land Act Cap.227 and international
valuation practices. The value is assessed by professional valuers after conducting a
survey to establish the prevailing market price for land in a given locality using a
comparative method. These rates are verified and approved by the Chief Government
Valuer.

Continuous sensitization and training of communities is being undertaken to ensure

awareness of their rights and responsibilities and to enable them guard against
speculators and land grabbing.

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 34. What is Government doing to ensure organised development and land use in
the Albertine Graben?

The Albertine Graben was declared a special

planning area during 2010 and emphasis has been
put on physical planning of Municipalities and other
towns in the region. Draft plans for Buliisa town
council together (figure 11) with, Sebugoro in
Hoima district and Butiaba in Buliisa district have
been prepared and are under review. The Ministry
of Lands, Housing and Urban Development
(MLHUD) is also preparing physical development
Figure 11: Draft Buliisa Urban Physical Development
Plan (2014-2024
plans for the area around the refinery in Buseruka
Subcounty, Hoima District. In addition, MLHUD has commenced developing a Landuse
plan for the entire Albertine Graben.

ENVIRONMENT MANAGEMENT

35. How are environmental concerns related to oil exploration activities being
handled?

Frameworks to ensure harmonious existence between the environment and oil and gas
operations are in place and are being implemented. These include:

 Environment and Social Impact Assessments (ESIAs) which are undertaken in

consultation with Government through National Environment Management
Authority (NEMA) and the local communities. This ensures that any potential
impacts – positive or negative – are considered and mitigation measures are put
in place.

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  A multi-institutional monitoring team from NEMA, PEPD, Uganda Wildlife
Authority (UWA), National Forestry Authority (NFA), Directorate of Water
Resources Management (DWRM), and Directorate of Fisheries Resources (DFR)
together with the respective District Environment Officers continually monitor
the activities.

 Other frameworks developed to date include an Environmental Sensitivity Atlas

for the AG, an Environment Monitoring Plan, and an Enforcement Strategy
together with Guidelines for Waste management and Operations in protected
areas. A Strategic Environment Assessment for oil and gas activities has also
been developed to ensure that environmental concerns are included in all
Government Plans, Programmes & Policies.

36. Are the Environment and Social Impact Assessment (ESIA) reports public
documents and can the comments from stakeholders be reviewed?

ESIAs are indeed public documents, and a copy of the final ESIA report is forwarded to
the district through the District Environment Officer (DEO). It includes all comments and
concerns raised and the responses given during consultations with stakeholders.

37. How is the waste generated from the drilling operations managed?

Waste produced from drilling operations is mainly composed of mud cuttings which are
a mixture of rock cuttings and drilling fluid that contains additives like bentonite, barite
which are used in the drilling process. In Uganda, Water Based Mud (WBM) has been
used most often because it is more environmentally friendly than Oil Based Mud (OBM).

During the exploration phase, waste generated from the well sites was stored at
designated consolidation sites where the waste was containerized and monitored. So
far, no accidents have been reported with regard to waste generated from various
exploration and production activities, as well as base camps.

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 NEMA has licensed twelve companies to handle waste at different levels namely;
transportation, treatment and disposal. Enviroserve (figure 12), White Nile Consultants
Limited and Luwero Industries have constructed facilities in Hoima and Nakasongola
respectively and are now licensed to operate these facilities. The previously
containerized waste has been transferred to these facilities for treatment and disposal.
In addition, the requisite legislation for waste management is being updated.

Figure 12: Waste treatment facilities at the Enviroserve waste management site in Nyamasoga in Buseruka Subcounty, Hoima
District. Right is a solid waste engineered land fill

38. How is Uganda prepared to address the potential for oil spills given the
presence of international water bodies in the Albertine Graben?
Oil spills undeniably present a risk in petroleum production processes across both
developing and developed countries. In Uganda, oil spills present an additional risk given
that Lake Albert is shared with Democratic Republic of Congo and also feeds the White
Nile that flows to South Sudan and beyond. The rich biodiversity in the Albertine Graben
presents another challenge.

To this end, an Environment Risk Assessment (ERA) and Sensitivity Analysis for oil and
gas operations in the Albertine Graben was undertaken. This informed the
development of an Oil Spill Contingency Plan that was drafted with input from Office of
the Prime Minister, NEMA, Ministry of Water and Environment, the Directorate of
Petroleum and the Petroleum Authority of Uganda (PAU) among other agencies. The

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plan considers level of Preparedness, Emergency response mechanism, Command
structure, Resources available and Mechanisms for handling oil spill.

39. How will Uganda guard against the Resource Curse?

The National Oil and Gas Policy recognises that the oil and gas sector can have a
negative effect of oil and gas resource utilization leading to economic stagnation,
environment degradation and increased poverty. Government of Uganda is conscious of
the fact that very many resource rich countries in Africa have remained poor despite the
existence of natural resources. Government has therefore developed a robust policy,
legal, regulatory and institutional framework that addresses the potential negative
environmental, social and economic impacts of petroleum exploration and production in
Uganda. In addition, capacity has been build both within and outside Government to
ensure strict monitoring and accountability. All stakeholders must play their respective
roles to ensure effective and efficient development and management of the oil and gas
sector in Uganda.

40. What were the findings of the Strategic Environment Assessment (SEA)? Are
the recommendations being implemented?

SEA is a new concept internationally which aims to evaluate the cumulative impacts of
the oil and gas operations to ensure that these are captured in all Government Plans,
Policies and Programs (PPP) across different sectors of the economy. The assessment
indicated that there would be economic gains, albeit not without environmental and
social challenges. For example, a large volume of waste would be generated with hazard
potential to human beings, water bodies and animals. The assessment also indicated
demographic changes in the region that would require planned social amenities like
road networks, health facilities, and urban plans to avoid slums, among others.

Some of the SEA recommendations under implementation include; development of a

waste management plan and strategy to complement the laws that are already in place;
State of the art waste management facilities have been constructed in the graben; the
Ministry of Works and Transport together with Uganda National Roads Authority are
upgrading the road networks in the Albertine Graben; plans to build an international
airport are underway; Clean water infrastructure has been extended to region; and a

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police department to attend to oil and gas issues has been formed. In addition, the
Ministry of Education, Science and Technology has sanctioned a curriculum that attends
to oil and gas by setting upgrading existing technical institutions to provide certifiable oil
and gas training. The Ministry of Lands has developed has prepared a regional physical
development plan for the entire Albertine Graben and planning for several growth
centers in the region is ongoing.

NATIONAL PARTICIPATION AND CAPACITY BUILDING

41. Which opportunities are available for Ugandans in the oil and gas sector?
There will be opportunities for employment and service provision. The Industrial
Baseline Study estimates over 160,000 jobs to be created during the next phase of
exploration and the development of the fields at Professional, Technical/ Artisan and
Unskilled levels from direct, indirect and induced opportunities. The study also
identifies 25 critical industries with high potential for National Content for Uganda.
These are;
 Civil construction ▪ Site safety and security
 Road construction ▪ Bulk material
 Cement ▪ Catering
 Domestic airline services ▪ Facility management
 Food supply ▪ Fuel wholesale
 Furniture manufacturing ▪ Generic waste management
 General maintenance ▪ Hazardous waste management
 Light equipment ▪ Manpower consultancy
 Mechanical construction ▪ Production operations
 Structural/flat steel ▪ Technical consulting
 Transport & Logistics (Goods) ▪ Transportation (People)
 Vendors ▪ Work safety products
 Reinforcement steel manufacturing

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The National Content Regulations further provide for fifteen categories of goods
and services reserved for Ugandan suppliers;
 Transportation.  Crane hire.
 Security.  Locally available
 Foods and beverages. construction materials.
 Hotel accommodation  Civil works.
and catering.  Environment studies and
 Human resource impact assessments.
management.  Communications and
 Office supplies. information technology
 Fuel supply. services.
 Land surveying.  Waste management,
 Clearing and forwarding. where possible.

42. It is estimated that between $15 and $20b will be spent by oil companies
during the development phase. What is being done to ensure part of this
money is earned by Ugandans?
Government has put in place policy, legal, regulatory and institutional frameworks to
ensure National Content development in the oil and gas sector, specifically during
the development phase where the bulk of the opportunities are. This framework
gives first priority of employment and supply of goods and services to Ugandans
where capacity is available in the country. Where capacity is lacking, Government is
working with the licensees, development partners and the private sector to build the
necessary capacity of Ugandan citizens and companies to benefit from the available
opportunities. This is being undertaken in line with the workforce skills development
strategy and plan and the industrial baseline study. Some of the efforts include,

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  Regulating in-flow of expatriates into the country,
 Supporting national enterprises to acquire contracts for goods and service
provision,
 Emphasizing capacity building and enhancing the capacity of Ugandan institutions
to provide required training at all levels.
 Dissemination of information on the oil and gas industry requirements such as
manpower and services among others,
 Putting in place an Enterprise Enhancement Center to raise the standards of
businesses and entrepreneurs,
 Development of a National Suppliers’ Database and a National Talent Register,
 Development of standards for goods and services reserved for Ugandans among
other measures
 Planning for an Agriculture Support Development Programme

43. How can one get a job in the oil and gas sector?

There are both technical and non-technical employment opportunities in the oil and gas
sector (figure 13). These include opportunities for qualified Geoscientists, Engineers,
Economists, Accountants, Social Work, among others. These opportunities are
advertised in the media and are competitive. The unskilled jobs in the exploration areas
are offered based on recommendations made by the community leaders in the areas
where the operations take place. The oil and gas sector, is however, not a mass
employer but offers more opportunities in service provision and spill over benefits
through other sectors such as clearing and forwarding, ICT, hospitality, manufacturing,
transportation, construction which are also growing.

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 Figure 13: Ministry staff with Ugandan employees during a drilling activity in EA 1

44. How is Government ensuring that Ugandans attain the required qualifications
to participate in the sector?

The Uganda petroleum Institute at

Kigumba was started by Government
during 2009 to offer technical training to
Ugandans on petroleum related
disciplines. In addition Makerere
University commenced a BSc degree in
Petroleum Geoscience in 2010 and an
Msc in Petroleum Geoscience during
2012 (figure 14). Government will
continue to work with other universities
and institutions across the country to
support the development of petroleum
training in the country. Figure 14: Makerere University Students studying sedimentary
rocks in Kaiso Tonya during a geological mapping field study visit.

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As these initial capacity building efforts are being taken forward, MEMD with support
from World Bank undertook a comprehensive study on the skills requirement for the
entire petroleum value chain in the country. This study documented the skills required
for exploration, development, production, refining and transportation at the artisan,
technical and professional levels of education. In line with the recommendations,
Government has supported acquisition of international certification such as City and
Guilds and OPITO by private and public training institutions.

Government has continued to prioritise capacity building of Officers from different

institutions taking forward the development of the Oil and Gas Sector in the Country,
including; Ministries of Finance Planning and Economic Development, Justice and
Constitutional Affairs, Lands, Housing and Urban Development, Energy and Mineral
Development, Water and Environment, NEMA, Uganda Wildlife Authority, Uganda
Revenue Authority, Office of the Auditor General and Bank of Uganda among others. To
date over 200 officers have been trained at post graduate level specializing in different
petroleum disciplines. In addition, specialised short term training programs are also
undertaken.

Visit www.petroleum.go.ug for more information on Uganda’s Oil and Gas Sector.

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