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Natural Gas Production in East Africa: An Inevitable Resource Curse

East African nations such as Mozambique, Uganda, Tanzania, and Kenya are experiencing a boom in oil and natural gas production that is increasingly exported by Western production companies to meet growing global demand. While these activities may appear to be an economic boon to these countries, the problem is that they could potentially cause natural gas to be a “ resource curse ” for these developing nations. A resource curse, or a “paradox of plenty,” can occur when the extraction of natural resources like fossil fuels and minerals in resource-rich countries contributes to slower economic growth than countries that are less abundant in these same natural resources. This effect could be mitigated if the government takes proactive steps to grow the rest of the economy, facilitate skills transfer, and combat corruption. Several economic mechanisms contribute to the resource curse. The import of foreign currency needed for foreign firms to […]

Posted On : Published By : Tom Whipple
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Tullow Oil to Settle Uganda Tax Dispute for $250 Million

Tullow Oil Plc settled a capital gains tax dispute with the government of Uganda after agreeing to pay $250 million related to a 2012 deal with Total SA and Cnooc Ltd. The company paid $142 million at the time and will pay the remaining $108 million in three equal installments, it said Monday in a statement. The first $36 million portion has already been paid with remainder due in 2016 and 2017, it said. Significant output of oil in Uganda, first discovered there in 2006, has been restrained by delays including wrangling between the East African country and companies about how much crude to process locally or export through a pipeline. Uganda has an estimated 3.5 billion barrels of crude, according to the Energy Ministry, with Tullow, Total and Cnooc planning to tap the Lake Albert fields. “In recent months, the government of Uganda has proposed welcome and necessary […]

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SOCO Oil Company Paid Large Sums to Officer in Congo, Activists Say

Photo Virunga National Park, the oldest in Africa, has been the center of an intense conflict between the forces of economic development and environmental conservation. Credit Uriel Sinai for The New York Times NAIROBI, Kenya — When a British oil company began prospecting for oil in Africa’s oldest national park , drawing worldwide concern and inspiring an Oscar-nominated documentary last year, the company was adamant in denying any wrongdoing. Though soldiers in the Democratic Republic of Congo may have engaged in a campaign of intimidation and coercion against nearby residents who are opposed to drilling in the park, the company said it could not be held responsible for their actions. “We can’t tell the army to go and kiss off,” Roger Cagle, the deputy chief executive director of the oil company, SOCO International, told The Telegraph newspaper in Britain. He said that the soldiers had been assigned by the […]

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Report: South Sudan’s fate hinges on oil

Durability of Salva Kiir, president of South Sudan, may be closely linked to oil production in the war-torn country. File Photo by John Angelillo/UPI JUBA, South Sudan, May 26 (UPI) — The political unity holding South Sudan together may hinge on battles over oil-producing regions along the country’s northern border, an analyst said. When it gained independence from Sudan in 2011, the landlocked country gained control over much of the oil-producing regions, but Sudan maintained its grip on export infrastructure. Conflict erupted in South Sudan in 2013 when Salva Kiir, the country’s president, accused former Vice President Riek Machar of staging a coup. Rebel forces two years on are waging battle for control over Paloch near the Sudanese border, the only part of South Sudan still producing oil. "Oil is South Sudan’s bread and butter," Luke Patey, a researcher at the Danish Institute for International Studies in Copenhagen, told […]

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South Sudan Repels Rebels’ Oil-Field Attack

ENLARGE File pictures showing South Sudan President Salva Kiir, left, and the leader of South Sudan’s largest rebel group and former Vice-President Riek Machar. Photo: Agence France-Presse/Getty Images KAMPALA, Uganda—South Sudan’s army has repelled a rebel attack on oil fields in Upper Nile state, allowing the country’s only functional crude oil facility to remain open, officials said Thursday. After capturing the Upper Nile state capital Malakal over the weekend, several thousand rebels loyal to former Vice President Riek Machar pushed toward the oil fields. But government troops backed by helicopter gunships, tanks and armored cars successfully defended one of the country’s major economic assets. “The rebels have been defeated” said military spokesman Col. Philip Aguer. “Oil fields are fully under our control”. By Wednesday evening both sides had lost dozens of fighters, but government troops beat back the rebel assault, the army and witnesses said. The rebel assault was […]

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Uganda: Refinery Will Take Five Years to Complete

Repairs to the railway network operated by RVR in Kenya and Tanzania. Transport infrastructure remains a challenge as Uganda readies itself for oil production. Uganda’s planned crude oil refinery will take five years to complete, a representative of the firm that won the bid to build the multi-billion 60,000 barrels per day facility has revealed. Andrey Kozenyashev, the Regional Representative of RT Global Resources in East Africa told an industry meeting convened by the Uganda Chamber of Mines and Petroleum in Kampala yesterday that the company anticipates to complete the project in 2020 at the earliest. "After signing the agreement, it will take one and a half years to do the designs and then three years for construction of the facility," Kozenyashev said. The RT-Global Resources-led consortium beat off a challenge from another consortium led by South Korea’s SK Group to win the $2.5 billion project that will involve […]

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Uganda not yet ready for oil prime time

Bank of Uganda says oil prices are too low to realize nation’s full oil potential and production targets. Photo courtesy Tullow Oil KAMPALA, Uganda, April 22 (UPI) — A weakened crude oil market means investments might not materialize in time to finance Uganda’s fledgling oil sector, the Bank of Uganda said. The Bank of Uganda said in a monetary policy report for April there are lingering questions over the nation’s oil development given the low price of oil and the investments needed to exploit the type of crude oil found in the country. "Whereas oil production had been projected to start in 2018, this date could now be pushed out even further, given that the profitability of oil investments could remain depressed in the foreseeable future," the report said. Crude oil prices are trading at around 40 percent below their June 2014 highs, forcing energy companies to spend less […]

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Statoil finds more gas offshore Tanzania

Norway’s Statoil announced new gas discovery offshore Tanzania. The company said it will catch its breath now to peruse next steps. File Photo by UPI/Shutterstock/James Jones Jr. STAVANGER, Norway, March 30 (UPI) — Tanzania may be ripe for future offshore natural gas development, though time is needed for appraisal after the latest find, Norway’s Statoil said Monday. Statoil announced the discovery of roughly 1 trillion and 1.8 trillion cubic feet of natural gas in the Mdalasini-1 well off the Tanzanian coast. Marking the end of the first phase of operations there, the company said its eight discoveries to date combine for approximately 22 trillion cubic feet of gas reserves. Nick Maden, a regional vice president for the company, said in a statement the company views Tanzania as a high prospect gas opportunity, "but there will be a pause in the drilling to evaluate the next steps and to mature […]

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Egypt, Ethiopia and Sudan Sign Nile Dam Declaration

ENLARGE Egyptian President Abdel Fattah Al Sisi, right, next to his Sudanese counterpart Omar Bashir during a welcoming ceremony in the Sudanese capital Khartoum on Monday. Photo: Agence France-Presse/Getty Images Egypt, Sudan and Ethiopia took a step Monday to defuse tensions around Ethiopia’s construction of a massive dam on the Blue Nile, which has threatened to upset the geopolitical balance in the region over how to share water from the River Nile. Egyptian President Abdel Fattah Al Sisi, Sudanese President Omar al-Bashir and Ethiopian Prime Minister Halemariam Desalegn signed a declaration in Sudan’s capital Khartoum, pledging to better share the Nile’s waters, an Egyptian presidency official familiar with the matter said. Ethiopia has said the project is necessary to produce much-needed electricity, but the building of the dam has been controversial, with some scientists predicting it could disrupt the flow of the river into Egypt, where it provides much […]

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On the River Nile, a Move to Avert a Conflict Over Water

Ethiopia’s plans to build Africa’s largest hydroelectric dam on the Nile have sparked tensions with Egypt, which depends on the river to irrigate its arid land. But after years of tensions, an international agreement to share the Nile’s waters may be in sight. For thousands of years, Egyptians have depended on the waters of the Nile flowing out of the Ethiopian highlands and central Africa. It is the world’s longest river, passing through 11 countries, but without its waters the most downstream of those nations, Egypt, is a barren desert. So when, in 2011, Ethiopia began to build a giant hydroelectric dam across the river’s largest tributary, the Blue Nile, it looked like Egypt might carry out its long-standing threat to go to war to protect its lifeline. But last weekend, all appeared to change. Ministers from Egypt, Ethiopia, and Sudan agreed on the basis for a deal for […]

Posted On : Published By : Tom Whipple