Tag: Uganda

Institutional Design in Low-Capacity Oil Hotspot

Oil drilling block managed by Tullow Oil at Lokichar basin in Turkana county in 2017. Five years after the discovery of oil, and four since a giant aquifer was found, drought struck again, shattering the dreams of a different future for Turkana. (Photo credit Tony Karumba/AFP via Getty Images)

This paper focuses on low-capacity countries courted by investors seeking access to petroleum resources during the exploration boom. In emerging oil hotspots, there has been growing interest in promoting national participation, largely by securing stakes in projects for national oil companies (NOCs). Some of these countries are new producers or remain in the exploration phase without having made any significant commercial discoveries, while others are established producers on a relatively modest scale and are now attracting renewed interest. The key question that emerges in all cases is how to organize and manage the petroleum sector in order to maximize the public benefit derived from oil and gas resources. In particular, what role should the NOC and other governing bodies have? This paper addresses the relationship among institutional structure and the goals of economic development and political accountability. It also examines the argument that oil producers are most likely to succeed when they separate commercial, policymaking and regulatory functions across distinct public bodies and restrict NOCs from performing any regulatory duties. Following on existing literature, this paper argues that the capacity level of a country at the time it seeks to establish an institutional structure has a major impact on which sorts of arrangements are most likely to succeed.

The report is available to download at the link below.

Energy Transition Brings New Challenges for New Petroleum Producers

Role playing exercise, Annual Meeting 2019, Kampala, Uganda.

The article covers the 2019 New Producers Group annual meeting. Held in Uganda, the meeting focused on the impact of the global energy transition on the pursuit of long-term economic benefits from oil and gas production. The uncertainties surrounding transition permeated the week-long series of events, including a dedicated training session on navigating emerging risks in the sector, a plenary discussion examining various market scenarios and a discussion of the intersection between Uganda’s oil ambitions and climate commitments as part of a “national seminar” organised by the host government.

A link to the original article is available below.

Africa’s New Oil and Gas Producers Must Prepare for More Disappointment in the Post-Coronavirus Era

 

The crash in oil and gas prices, triggered by the coronavirus pandemic and the slump in economic activity, has dealt a blow to the plans and public finances of major oil and gas producing countries. But a group of countries in sub-Saharan Africa once designated as “prospective producers” are facing a different challenge. For new producers in the pandemic era, some licensing rounds are likely to be cancelled, and production is being pushed back once more. Debt is becoming an even greater issue. Yet some investors – like Total in Uganda – still show signs of interest. To clarify this mixed picture, we have reviewed our analysis of the experience of the 12 sub-Saharan African countries that made their first major discoveries during the period from 2001 to 2014.

A link to the original article is available below.

How Did Africa’s Prospective Petroleum Producers Fall Victim to the Presource Curse

 

This paper reviews resource sector developments in 12 countries in Sub-Saharan Africa that made their first (major) petroleum discoveries during the most recent commodity boom. The analysis, which goes back to 2001, looks at sector forecasts of international organizations, governments, and companies and compares them with the results that emerged. The paper finds that a third of the countries did not make any commercially viable discoveries. Among those that potentially had commercial finds, the latest timelines from discovery to production are 73 percent longer on average than initially expected. In the six countries for which there are comparable data, revenue collected thus far or the most recent revenue projections for countries yet to reach production are 63 percent lower on average than the initial forecasts. All 12 countries experienced a disappointment in at least one of the three dimensions analyzed—and these disappointments are likely to be exacerbated by the recent price crash. The paper also documents the various policies adopted in response to the discoveries and — with the benefit of hindsight — finds that, in some cases, this over optimism contributed to the ‘presource curse’: suboptimal policymaking that did not align with the new realities. Some recommendations are provided on how better to navigate the inherent uncertainties in developing the sector.

The paper is available at the link below.

National Seminar for Uganda

 

As Uganda prepares for oil production, this seminar provided an opportunity for its government agencies to harmonize public policies that affect or are affected by the oil sector, coordinate across government for improved information flow and planning, and identify investments through which Uganda can leverage the oil sector and achieve its sustainable development goals. The meeting was attended primarily by Ugandan officials, but also included officials from producing or near-producing countries to share their experience, as well as oil company executives.

A summary of the National Seminar is available at the link below.

Annual Meeting 2019

The 7th Annual Meeting of the New Producers Group was held in Kampala on 11–15 November 2019 and hosted by Uganda’s Ministry of Energy and Mineral Development, the Petroleum Authority of Uganda and the Uganda National Oil Company. The meeting included two days of specialised training covering topics such as risks relating to the development of the petroleum sector, revenue management, contract negotiation, communications in the natural resource sector, national oil company performance drivers, and oil metering, valuation and marketing. The remainder of the meeting consisted of discussions and exchanges between the participating countries. The theme of the discussions was ‘Building Capacity and Institutions’. The 2019 discussions showed a heightened concern for the impact of the global energy transition on emerging petroleum producers and their pursuit of long-term economic benefits from oil and gas production. The uncertainties surrounding the transition permeated discussions throughout the week, including a dedicated training session on navigating emerging risks in the sector, a plenary discussion examining various market scenarios and a discussion of the intersection between Uganda’s oil ambitions and climate commitments as part of the national seminar organized by the host government. These discussions provided an opportunity for a nuanced and detailed sharing of perspectives as governments seek to manage risk. The week’s informal and plenary discussions also demonstrated the growing maturity of the network and the interest of participating countries in deeper cooperation.

A summary of the Annual Meeting is available at the link below.