Uganda’s oil explorers walk a tightrope over global environmental protection requirements

Saturday June 22 2013

By ANGELO IZAMA Special Correspondent

A request by the World Heritage Committee to cancel oil exploration permits within Democratic Republic of Congo’s Virunga National Park is a blow to Uganda’s oil programme, flagging the complexities of balancing environmental concerns and petroleum activities in one of the only places in the world where both exist in abundance.

Oil companies in Uganda avoid the conservation versus development debate. The companies fear damage to their business reputation if environmental harm occurs.

The firms are also concerned about penalties arising from environmental damage as well as difficulties in raising public money to finance projects that are bonded to international conventions such as the World Heritage Convention, or the Ramsar Convention on the Protection of Wetlands.

Virunga is in the western branch of the Great Rift Valley.

International financial institutions have embraced the protection of globally significant sites, obligating companies like France’s Total — which holds licences in both the Virunga and in an area within Murchison National Park in Uganda — to protect the environment or risk losing financing.

These obligations are contained in the social and environment standards agreed to by the International Finance Corporation, the investment arm of the World Bank, as well as the Equator Principles, a voluntary code of responsible project financing to which most international banks have signed up.

A May 2012 document developed by Tullow, and shared with its partners Total and the China National Oil Corporation (CNOOC) titled Lake Albert Development specifically takes issue with the Ramsar wetlands, national parks and reserves.

Tullow, which farmed down its assets to bring in Total and CNOOC, is also worried that the Uganda government will delay issuing permits over concerns on “biodiversity” value and fretting that developments will “likely bring to the fore the NGO community and international pressure groups.” 

They were not wrong.

Until now, and despite investing hundreds of millions of dollars in the Albertine Graben, oil companies such as Total and Tullow have avoided a robust public debate on the risks to the environment of exploiting oil in protected areas, preferring to focus their preparation on internal plans and engagement with the government.

The Ugandan government, in March, concluded a voluminous 300-page Strategic Environment Assessment (SEA) on oil and gas activities in the Albertine, to serve as a guiding document in confronting these challenges.

In its recommendations, the SEA states that oil and gas “activities in areas that are formally designated for eco-system protection and biodiversity conservation should be in accordance with the official protection status of the area.”

Environmentalists such as Paul Mafabi, a former member of the Ramsar standing committee and a commissioner in Uganda’s Water and Environment Ministry, have faulted the government and the oil companies for working backwards on the issue.

“Ideally the processes should have started before,” said Mr Mafabi, referring to a Ramsar resolution that urges the use of the SEA and environmental impact sssessments (EIAs) as precautionary tools to determine the potential damage to such ecological assets as the protected wetlands in Murchison Falls around which Total is drilling.

Many independent professionals, however, say EIAs so far issued for exploration work are below what may be permissible under more stringent IFC/Equator standards.

The Albertine Graben makes up to 70 per cent of Uganda’s protected national parks, reserves and forests.  Unlike the DRC, Uganda’s petroleum programme is at an advanced stage, with an agreement on development expected shortly between the government and the joint venture partners, which besides Total and Tullow include China’s CNOOC.

Total and Soco International PLC, which hold licences across the border (Tullow lost theirs in 2008) often operate from the Ugandan side of the border under an arrangement between the two governments.

Despite the difference in the evolution of country oil programmess, the Albertine Graben has been addressed by Uganda and DRC as a single basin since a 1990 agreement signed between former president Mobutu Sese Seko and President Yoweri Museveni.

Officially known as the “Agreement of Co-operation for the Exploration and Exploitation of Common Fields” or the “unitisation” agreement between the two countries it was updated after border clashes over oil and fishing on Lake Albert in 2007 at a summit held in September in Ngurdoto, Tanzania.

Since then, both the 1990 agreement and the Ngurdoto upgrade have been joined by a further addendum signed in January this year.

Together the bilateral arrangements create shared obligations on the environment though security at the common border has long dominated the co-operation between the two countries. 

In addition, Uganda’s current draft foreign policy review, which has a section on oil, states as a priority “extraction, exploration and exploitation of oil and gas do not lead to environmental degradation”.

Fears that the Albertine Graben could turn into nightmare of Niger Delta dimension are not far-fetched given the security profile of the region.

However till now, most international campaigns including in the Virunga have dealt with the threat of rebel movements to the forest and its precious inhabitant, the rare mountain gorilla.

Oil companies, according to several sources, have however been concerned all along about the impact of campaigns by international environment lobbies.

For example, Uganda-based licensees have steered clear of drilling offshore on Lake Albert, shared by the two countries.

The 2007 clashes, weak governance on the Congolese side as well as concerns what an oil spill could do on a transboundary lake whose borders are still un-demarcated, lead the calculations of oil companies.

Over 30 proposed oil wells around Lake Albert, particularly in the King Fisher discovery area, likely to be one of the first to be commercialised, are onshore.

Oil companies skittish about contamination have also invested in drilling technologies that leave the top surface and ecological systems untouched, say sources at the Petroleum Exploration and Production Department. But even then problems remain that could prove troublesome in the future.

For example, when China’s CNOOC wanted to drill onshore but reach under the lake bed, its request showed how unprepared the Ugandan authorities were to handle the technical complexity of such a risky operation.

The company was requested to provide evidence that its “deviated well” would not endanger the lake or its aquatic life but its submissions, including the choice of using synthetic based muds (SBM), could not be independently verified by Ugandan government agencies.

These agencies like the environment regulator National Environmental Authority lacked the facilities of their own to do independent tests and the finance to independently outsource.