East Africa Should Not Compete Over Oil Discoveries – Analysts

An oil rig in western Uganda, experts have warned East African Countries against competing for oil discoveries
An oil rig in western Uganda, experts have warned East African Countries against competing for oil discoveries

The rate of the oil discovery in the East African region may be comforting enough to prompt the lucky countries to quickly embark on aggressive competition to gain an edge over each other, win more market and reap profits once production begins but experts have sent out an early alert.

A range of petroleum and economy specialists across the region have warned that attempts by the individual countries in the region to engage in competition against each other would easily lead to poor management of the natural resources.

Instead, they have advised that the countries that have made the oil discoveries should pool resources to increase their capacity margin to better manage the impact of the finite resource.

Critics say that for countries such as Uganda and Kenya, oil production will present a situation that can only best be described as ‘learn on job’ unlike neighbours, South Sudan and Sudan that have been engaged in oil production for years. They argue that East Africa’s inexperience at managing oil production could hurt both the economy and the environment unless the inadequate capacity is boosted through cooperation.

Paul Adong Bith, the Managing Director of Nile Petroleum in South Sudan, has described the oil and gas industry as very complicated adding that the presence of oil in East African could also have impact of the rest of the energy market in the entire region and beyond.

He cited that experience of South Sudan that is yet grappling with shut refineries and options of transporting the crude oil through a pipeline as examples of the complexities in the industry.

Jaspat Agastiva, the Director Department of Resource Survey in Kenya’s Ministry of Environment and Mineral Resources, has emphasized the need to create regional databases on natural resources management and cooperation in order to optimally exploit the discovered oil.

Ernest Rubondo, the Commissioner of Petroleum Exploration and Production Department in Uganda’s Ministry of Energy and Mineral Development, acknowledges that they would not engage in competition but mutual cooperation to extract the discovered oil.

Rubondo cited the example in the Middle East where he said nearly all the countries are involved in oil production and were flourishing, a situation he said was possible to replicate in East Africa.

There has been expectation that the announced discovery of oil in Kenya, which came on the heels of the announcement of commercial discovery in Uganda, would pit the countries on a path of competition over exploitation of the natural resource. Other countries exploring for oil in the region include DR Congo and Tanzania.

With questions such as market size and whether or not to build a refinery or transport the crude oil by pipeline, the industry is yet a complex puzzle for landlocked countries like Uganda, which would require a sea port of neighbouring countries to export its oil.

Philip Boldit, the Director General of Economic Planning in South Sudan, says he has concerns over who would constitute a market for the other if all the countries in the region embark on oil production.

Boldit says his advice is for countries such as Uganda, which he said has been feeding the entire region through food production to specialise where it rewards most: producing food.

Despite the obscure picture, other experts have indicated that the new comers in the oil industry could also optimally exploit the resource and achieve development.

Silas Olang, the Tanzania-based Senior Regional Associate of Revenue Watch Institute, says that although there is hardly any good example of oil resource management in Africa, the new comers still have enough opportunities to learn from on how to use the oil to transform their economies, improve the livelihood of their citizens and achieve development.

Among the certainties over the oil discoveries in the region are raised expectations with almost every individual hoping to have their lives transformed for the better however, what is not clear is how and whether the expectation will be met.

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