At the height of terror attacks in Uganda towards the end of 2n 1st February 2022, the global head of Total Energies announced the Final Investment Decision (FID) on Uganda’s Tilenga and Kingfisher oil projects. This decision is a significant milestone in Uganda’s long pilgrimage to becoming an oil-producing country. To comprehend the magnitude of this breakthrough, we must look back to the starting point of this trek. Uganda’s oil potential was first brought to light by Edward James Wayland, a government geologist. He published his geological survey report titled “Petroleum in Uganda” in 1925, wherein he reported on the existence of large quantities of oil seepages in the Albertine basin. This was followed by a series of geological surveys, drilling of shallow wells, and a host of petroleum exploration activities during and after colonialism.

In 1986, the president launched capacity building and information gathering efforts in preparation for a more rigorous adventure to exploit Uganda’s oil. Efforts of petroleum exploration intensified between the 1990s throughout the early 2000s, with companies like Heritage Oil and Tullow Oil coming on board to explore Uganda’s oil potential in the Albertine region. These exploration exercises entail a series of complex, technical, and capital-intensive activities closely monitored by the government with the sole purpose of establishing the number of oil deposits, the nature and location of hydrocarbons, and the economic profitability of the oil and the environmental-safety risks. Before an oil company invests in any project, some of the risks taken into consideration include the political risks due to weak governments and dictatorships, the cost of oil production, and the nature and amount of hydrocarbons present. This risk assessment is simply done to ensure that the oil project is worth the huge investment. Assessments of these risks is a thorough and rigorous process given the fact that oil projects in the world have a high failure rate standing at a towering rate of over 65%.

"This Foreign Direct Investment is expected to create 600,000 jobs for Ugandans and provide a market for local service providers, influence human resources, and improve infrastructure."

The recent FID announcement by Total Energies and CNOOC is a commitment for these companies to invest a lofty fifteen billion dollars in Uganda, which according to the minister of energy, will facilitate a Gross Domestic Product growth of 22%. This Foreign Direct Investment is expected to create 600,000 jobs for Ugandans and provide a market for local service providers, influence human resources, and improve infrastructure. The oil and gas industry will also greatly increase the country’s tax base through taxation of oil companies, persons employed directly and indirectly by the oil and gas sector, and other services providers contracted by key players on the oil project not to mention the profits earned by the government from the undertaking. While the first drop of oil is expected to be realized in 2025, the impact of the oil investment will be felt before then. The benefits of the investment decision will be enjoyed by all Ugandans through improved public utilities and a potential increase in the economy's purchasing power.

TWhile the picture may seem rosy, it must be understood that prosperity and doom are two sides of the oil production coin. The innumerable benefits that we all hope for may elude us if this resource is not prudently handled and monitored. The most significant downside of oil production is its brutal scorching of the environment through oil spills that occur accidentally or negligently. These oil spills kill every semblance of aquatic life in an unmeasurable radius and can potentially render fishing impossible in the basin where they occur, not to mention the scorching of the soil in the surrounding area. Between 2015 to 2021, the Nigerian government documented over 4,900 oil spills which resulted in the release of millions of litres into water bodies used as a source of water and fish. Oil spills can cause an irreversibly negative impact on the environment and a classic example of this is the BP-operated Macondo Deepwater Horizon oil rig, which spilt oil in the Gulf of Mexico in 2010. The impact of the oil spill on the water body is still felt to date, with fishing activities significantly lower than they used to be more than eleven years ago, notwithstanding the world-class response from the government of the United States.

With such potentially overwhelming economic ramifications that mAnother drawback common to African oil-producing countries is political instability born of discontent and precipitated by the squandering of oil revenue, government brutality and high poverty levels. Government officials usually collude with petroleum companies to either cover up or turn a blind eye to the non-compliance of environmental standards set for them. The continuous oil spills, whose impact is not alleviated on account of corruption then cause barrenness of lakes, rivers and land hence plunging the people into worse economic conditions. Exacerbated by embezzlement of oil revenues, the lack of personal and institutional accountability and widening economic inequality, public resentment fuels incessant protests, which are usually quelled by dehumanizing violence by the state. In 2002, the government of Nigeria was held liable by the African Court of Human & Peoples’ Rights for failing to hold oil companies accountable for the oil spills made and brutally suppressing people who protested against the oil spills, corruption, and the extreme poverty that engulfed them at the hands of an indifferent government. Despite this ruling, nothing has changed, and Nigeria, like other African oil-producing countries like Angola, Gabon, and others, continues to grapple with environmental hazards, political turmoil, corruption, authoritarianism and high levels of poverty.

At the crossroads of such drastically different impacts of oil production, all Ugandans must go get more civically responsive and hold those responsible for Uganda’s oil production accountable. All stakeholders must always remember that oil production can accelerate Uganda’s journey to middle-income status and beyond or be a poisoned chalice.