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Evaluating Uganda’s Oil Sector: Estimation of Upstream Projects

About the Project

Natural Resource-led Development in New Producing Countries Our project seeks to understand how natural resource extraction can drive inclusive economic growth in new producing countries. We are engaged in a multiyear, multidisciplinary study with four objectives:

  • Understand the human geography of new producing countries.
  • Assess the magnitude of new discoveries and estimate direct fiscal impact.
  • Understand how industry can be localized to create economic growth.
  • Estimate spillovers and welfare impacts to society.

We recognize that policymaking in new producing countries is a complex process, and our project also seeks to understand the interactions of actors’ interests that drive energy sector policies.

Our initial focus is on four countries – Kenya, Mozambique, Tanzania and Uganda – that expect to develop significant oil and gas reserves in the next 5-7 years. Through natural resource development, these countries hope to achieve middle-income economic status by 2030-2040. This project is conducted through close collaboration with leading think tanks and NGOs in Africa.

Key Points

Uganda and other countries in Eastern Africa are on the cusp of developing many oil and gas resources, and there is reason for local content to be included in the discussion. As part of a larger research effort at KAPSARC – which includes determining the local capacity for goods and services, economic impacts and policy implications – estimating the actual costs for development are a key input. Drawing on government and public domain information, this paper makes a detailed assessment of the cost, schedule and production estimates resulting from investment in Ugandan upstream oil projects.

Ugandan upstream oil and gas development is focused on three major projects on the shores of Lake Albert with Tullow Oil, Total and China National Offshore Oil Corporation (CNOOC) as partners. These projects are somewhat challenging due to their remoteness, complex geology and very waxy crude that is difficult to transport to market.

Combined, these projects will cost approximately $18.46 billion, or $17.50/barrel:

  • CAPEX                                   $8.640 billion
  • OPEX                                     $9.088 billion
  • Decommissioning               $0.731 billion
  • The opportunities for local participation are spread across many different sectors, broadly:
  • Energy and Mining              $4.275 billion
  • Services                                 $2.741 billion
  • Manufacturing                     $2.676 billion
  • Construction                        $2.513 billion
  • Utilities                                  $2.201 billion
  • Insurance                              $1.780 billion
  • Transport and Storage        $0.463 billion
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