Uganda’s Oil

Via The New York Times, some details on Uganda’s recent oil discovery.  As the article notes:

“…The discovery of 800 million barrels of oil has been confirmed in Uganda by Tullow Oil, Europe’s largest independent oil producer.

The find is valued at $50 billion — and it appears that’s just the start.

In an interview with Uganda’s New Vision newspaper, Tullow Oil’s chief executive, Aidan Heavey, said “what we think is going to be found in the next few years is about two billion barrels.”

Tullow Oil’s share value rose to $14.6 billion after the announcement, and the company is also negotiating with officials from Congo to explore potential oil reserves across the border.

Meanwhile, reports of a deal between Tullow Oil and the Ugandan government suggest that for every ten barrels found by Tullow, the government gets eight. This would represent a huge windfall for the landlocked East African country, where annual gross domestic product is estimated at $14.53 billion.

If a suitable pipeline to the coast in Kenya or Tanzania can be built, the nation could could become a significant oil exporter.

Just how soon any of this might transpire, however, is open to question.

The discovery is close to Uganda’s western border with Congo — an area known for its political instability. Conflicts between rebel militia operating in the region and Congolese, Ugandan and United Nations forces are common, and developing a pipeline in this environment is likely to make potential investors wary.

And the announcement of the oil finds has already sparked conflicts over land rights, according to Linda Ochiel, a spokeswoman for the Open Society Institute’s Initiative on East Africa. The group promotes public participation in democratic governance.

“Providing the government is transparent in its management of resources, this discovery provides an opportunity for Ugandans to benefit greatly from the increased revenue,” Ms. Ochiel said. “But, if there is a lack of transparency and information is not provided by the government, this would increase the opportunity for corruption to occur.”

This entry was posted on Tuesday, September 29th, 2009 at 3:45 pm and is filed under Uganda.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

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