Refined or crude? Battle for Uganda oil turns murkier

Competing interests tagged to either building of an oil refinery in Uganda or exporting crude products are delaying the country’s oil programme as the scramble to gain from the “liquid gold” intensifies.

The EastAfrican has learnt that some interested parties are convincing the government to export crude oil as the best economic option.

They say the oil-type here has a high content of sulphur and wax, making it very expensive to refine, against the contemporary ideology of value-addition on products from poor countries.

This is happening amid government secrecy over what is happening to an oil programme that anticipated production of at least heavy fuel this year, partly to rid the country of a power shortage through fuel-intensive thermal power.

Sources say there is a lot at stake if Uganda builds an oil refinery with the capacity to serve the regional market and beyond.

Those pushing for export of crude oil are local and foreign entities with interest in the logistics industry.

They expect to gain by continuing to ferry refined oil from the coast.

The second group includes representatives of oil-producing governments and multinationals that want to either import the crude to be refined back home, or to safeguard their market here, regardless of where Uganda sells her produce.

Apparently, they put forth a powerful voice to the extent that President Yoweri Museveni started doubting his own conviction to refine oil in Uganda.

After Claude Landry, a Canadian oil expert with 50 years of experience in the sector, told him that refining oil in Uganda is economically viable, President Museveni was quoted in the local media saying: “You’ve immunised me against any confusion on the issue.”

It is understood that established cartels of some oil-producing countries and multinationals are not comfortable with another major producer such as Uganda — with two billion barrels of oil already confirmed — joining the club.

They have set up refineries across the world to serve sub-regions like Asia, Africa and Europe.

By refining oil and supplying it to the Great Lakes market, as hoped, Uganda could significantly impact on the current market order.

Stephen Biraahwa, chairman of the National Economy Committee in Parliament, says intrigues by powerful cartels over Uganda’s oil resources started when an arrangement to exploit the resource, jointly with DR Congo, went under with the Joseph Mobutu Seseseko regime.

Apparently, President Museveni and the late Mobutu, ex-President of DR Congo, then Zaire, had agreed to exploit oil near the two countries’ borders jointly.