The Effectiveness of The Legal Framework on The Participation of Nationals in The Oil and Gas Sector in Uganda.

Abstract

Uganda has been described by the oil industry press as Africa’s ‘hottest exploitation frontier’. Accordingly, Uganda’s Albertine Graben is estimated to hold more than 6 billion barrels of oil, placing Uganda among the foremost African oil producers. The discovery and eventual exploitation of this oil resource is one of those once-in-a generation events that can transform the country not only on a macro level but also in the individual lives of Ugandan citizens. Notwithstanding the above, commercial oil production has not taken place in Uganda and it is anticipated that joint venture partners Total E&P and CNOOC will commence production in 2022. There is no doubt that the oil resource has the potential to widen Uganda’s revenue base within the next 6-10 years. However, many of the developing countries that become reliant on oil (or other extractive resources) tend to immediately start to see a deepening range of political, economic and social challenges that are mostly tied to lack of skills and involvement on the part of the nationals, resulting in foreigners taking over the industry. The limited participation of citizens in the natural resource extraction leads to trickle-down consequences of a natural resource such as oil, leading to undesirable knock-on consequences on the economy. There is need to take effective control of the exploitation, exploration and production activities of the oil and gas sector as soon as commercial exploitation commences. This study analyses the extent to which Uganda’s current legal framework promotes national involvement in the petroleum sector as the country transitions into oil-production. It also shows the main loopholes in the existing legislations and provides measures to overcome them.