Opinion: Why Uganda’s Oil Refinery Is Crucial

By Elison Karuhanga

Uganda stands at an interesting point in her journey to first oil. With the delivery of the East African Crude Oil Pipeline (Eacop) imminent, preliminary construction is underway.

Drilling operations are ongoing at the Tilenga and Kingfisher oil fields, signalling that Uganda’s transformation into an oil producing nation is on the horizon and within sight. Eacop is more than a pipeline; it’s a conduit for economic aspirations, and a litmus test for regional cooperation.

The trajectory of Uganda’s oil journey isn’t merely a national affair but a regional endeavor with implications stretching across the East African Community (EAC).We must hold steadfast to our vision of building a refinery with a capacity of 60,000 barrels of oil per day in Uganda.

The need for a refinery in this region is paramount and cannot be overstated. Eastern and southern Africa are largely devoid of operational refineries, with the exception of one in South Africa. This state of affairs must not be allowed to continue. It is essential to be aware of the broader energy landscape.

Recently, the International Energy Agency (IEA) issued a report indicating that oil demand might peak by 2030. This projection raises questions about the long-term advisability of heavy investments in this sector. However, on the contrary, the Organization of Petroleum Exporting Countries (OPEC) challenges this viewpoint, and major oil corporations are ramping up their investments in fossil fuels.

A case in point is Chevron’s recent acquisition of Hess, a staggering investment of $53 billion (Shs200 trillion), which rebuffs the IEA’s peak oil projections as not being “remotely right”. While the oil majors, OPEC, and the IEA present divergent forecasts for the global energy future, there’s a consensus that in Africa, the demand for oil and gas is set to escalate. The IEA World Energy Outlook projects that while African demand will grow substantially, African oil production will reduce and Africa will rely more on imports for refined petroleum.

With almost 80 percent of the global population without access to electricity residing in Africa and the continent’s projected population growth, the inevitable energy deficiency necessitates strategic interventions. One such intervention is the refinery in Uganda.

We know that, for example, oil demand in Uganda will keep growing. The need to ensure that we have secured the supply by building a modern refinery is not just good business. It must be and remain a national security priority.

There are those who are so concerned about what a refinery would contribute to our emissions. It would actually make more environmental sense to build this refinery here. Uganda will continue to use petroleum products at an increased rate even by IEA projections.

The question becomes: is it more environmentally friendly to have the refined product transported here by sea on huge ships polluting the waters and using heavy fuel oils to the port at Mombasa? Is it then better to put the oil in huge trucks and drive it all across the Lake Victoria Basin to Uganda? The answer is no. The refinery is not just an energy security priority, it is also good for the environment.

The global financial atmosphere is tough when it comes to financing African energy projects. Many companies have always traditionally invested in finding oil in Africa, but few have been able to commit resources to refining it here. We must reverse this trend.

While the global energy discourse has a variety of perspectives, it is vital for Uganda to strategically position itself, ensuring that we maximize the benefits from our oil resources while staying attuned to global trends. If the IEA is to be believed, then the future of oil and gas is African. We have lost many opportunities in the past. Now, a historic opportunity knocks at our door.

An opportunity to not just produce oil but to refine it and transform our society. We must open the door and let opportunity in.

The writer is an advocate and partner at Kampala Associated Advocates. [email protected]