Uganda’s oil ambitions slip further out of reach

Subject

Outlook for Uganda's oil sector.

Significance

Uganda’s dreams of becoming an oil producer have hit another delay with the expiry of an agreement for Tullow to farm down part of its stake in the Lake Albert oilfields to Total and the China National Offshore Oil Corporation (CNOOC). Tullow will now seek a new buyer, but in the meantime Total, the project lead, has suspended work on the export pipeline element of the project.

Impacts

• Tullow has said it will relaunch the sales process to reduce its stake and is confident of finding a buyer.
• Recent exploration success in Guyana will help fill the gap in Tullow’s project pipeline created by delay in Uganda.
• If Kenya’s planned oil export pipeline goes ahead, Uganda’s oil could yet be exported via Kenya, a route Uganda and Total rejected in 2016.
• The recurrent setbacks could also affect wider perceptions in the investment community as the government touts plans for industrial parks.