AFRICA MONEY-Uganda oil a sad story of the three Gs

Thu Nov 15, 2012 6:51am EST
 
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By Ed Stoddard

JOHANNESBURG Nov 15 (Reuters) - Oil in Africa tends to depend on the three "Big Gs" of geology, geography and governance and investors in east Africa's much-hyped finds are discovering the hard way what happens when they are not perfectly aligned.

Six years after Uganda struck oil in its interior, all of the pieces are beginning to click into place for a boom that holds the promise of prosperity for one of the continent's poorest states.

A number of oil firms including Total and Tullow Oil plc are engaging and plans are in place for the infrastructure needed to exploit estimated reserves of around 3.5 billion barrels.

But production is still not seen before 2015 and may take longer, while the pipeline to get the oil to the coast for export will not be in place before 2018 at the earliest.

Compare that to the Atlantic coast nation of Ghana 2,000 km west, which took only 3-1/2 years to crank out its first barrel of crude after oil was discovered and is already seeing its first exports, and it looks like Uganda has missed out.

"Here's a country that discovered oil in 2006. Hasn't produced a drop. And they say they will only export crude when they have a refinery and the best estimates for operators like Total is 2017 for production," said Dr Duncan Clarke, chairman of oil/gas advisors Global Pacific & Partners.

"So this is 11 years of an interrupted exploration cycle which typically you associate with a war or civil conflict or a meltdown ... 11 years of lost impact in GDP growth."

  Continued...