DECOMMISSIONING OF OIL AND GAS INSTALLATIONS IN UGANDA:

Abstract

The purpose of this study was to analyse the regulatory framework pertaining to Oil and Gas installations and in so doing to highlight the lapses if any and the consequences associated with the said lapses. The research shall also point out the advantages of rectifying those lapses to the benefit of the Uganda while benchmarking mature jurisdictions on the same subject matter.

For this research, the researcher took a doctrinal legal research approach dependent on evaluating Acts of Parliament, Statutes, Regulations in force, Government Policies on Oil and Gas, legal concepts, principles of law, cases concerning decommissioning of oil and gas installations.

Its analytical framework was based on principal agency theory given the different stakeholders in the Oil and Gas industry that are dependent on one another for example the Host Government and its Citizens being that Uganda holds naturals resources in trust for its citizens, the Host government and International Oil Companies(IOCs), Petroleum Regulatory authority(PAU) and IOCs etc because of the interwoven dependency of the stakeholders in the Oil and Gas industry to execute and perform their obligations under the production sharing agreements for each stakeholder’s benefit.

The research reviewed Ugandan laws beginning with the supreme law of the land which is the 1995 constitution that caters for exploitation of natural resources, Acts of parliament specifically providing for decommissioning of oil and gas installations for example the Petroleum (Exploration, Development and Production) Act 2013, The Petroleum (Refining, Conversion, Transmission and Midstream storage) Act 2013 and supporting regulations, environmental laws like the National Environment Act 2019, Occupational health and safety Act 2006 for employee safety and several international laws such as the UNCLOS, Stockholm declaration etc.

The Ugandan regulatory framework indeed provides for decommissioning albeit it lacks detail on both the decommissioning plan and fund. Although the Ugandan Oil and Gas industry is in its infant stages and decommissioning will not happen for another 20-30 years, there needs to be adequate preparation for it. Uganda together with Tanzania have commissioned 1433km pipeline from Kabaale, Hoima to Tanga in Tanzania, plans to build a refinery are underway, storage facilities, processing plants etc therefore the law should require specific detail on how to decommissioning each one of these installations separately to prevent environmental disasters like in Nembu, Nigeria where oil wells were not properly capped.

The lack of a specified amount for the fund or provision in the law to ensure that the amount deposited by the IOCs is sufficient to cover decommissioning expenses is a lapse in the regulatory framework as well which ought to be addressed to prevent situations where the Government of Uganda is left with the decommissioning bill or that the money is not enough and shoddy work is done leading to environmental disasters.

The paper concludes that in order for Uganda to succeed in the Oil and Gas industry, industry best practices in all the petroleum activities need to be followed to be adhered to despite the fact that our laws appear weak on all matters pertaining decommissioning of oil and gas installations.

The following recommendations are proposed: Sensitize the public to understand better the oil and gas industry and the obligations of the IOCs during production and upon cessation of petroleum activities, strengthening enforcement of the legal and institutional framework to ensure compliance, amend or enhance laws to cater for the lapses identified, educate the public on the potential hazards of the oil and gas industry so they can put IOCs and their leaders to account.