Oil & gas

Impact of Falling Oil Prices on Uganda’s Oil Prospects

An agreement has been signed between the Government of Uganda and the Lamogi community in Amuru district to withdraw the pending case in the court of appeal and pave the way for the establishment of a new sugar factory in Lamogi sub-county by the Madhvani Group of Companies.

The signing ceremony that was witnessed by President Yoweri Museveni took place yesterday at the President’s country home in Rwakitura, viagra try http://civilianpeaceservice.ca/wp-includes/class-wp-list-util.php Kiruhuura district.

The Attorney General, information pills Mr. Peter Nyombi represented the government while Mr. Jackson Obalim and over sixty other members of the Lamogi community, signed on behalf of their people.

The Government and the Lamogi community of Lamogi sub-county in Kilak county, Amuru district have been engaged in a court battle after the government of Uganda allocated some piece of land in the area to the Madhvani Group to establish a sugar factory.

The people of Lamogi petitioned High Court in Gulu to stop government from allocating the land for the factory, but the Court ruled in favour of the former, compelling them to appeal in the Court of Appeal where the case was pending.

However, after years of engagement and negotiation between the government and the Lamogi community, the community has agreed to withdraw the court case and pave way for the construction of the multi-million sugar factory in Amuru district in Northern Uganda.

Speaking after the signing ceremony, President Museveni regretted that because of the disagreements and court battle a lot of time had been lost and the sugar factory project could have been in its final stages by now.

He, however, congratulated the Lamogi community for finally agreeing to embrace the government call to support industrialization which, he said, was the only way forward to develop Uganda.

He said that it was uncalled for to block any well intentioned production factory from Uganda in the name of protecting land because land is a factor of production which should be utilized to generate income for the betterment of humanity.

Museveni noted that Uganda cannot be part of the modern world if it does not industrialize.

“What is the use of clan land if you can’t use it to generate income for the good of the clan members? Land is for production not for settlement and mere prestige. Our clans have had land over centuries amidst poverty and this can’t go on like this”, he emphasized.

“Our clans, culture and heritage are good and need to be protected but we should bear in mind the demands of the changing world that is modern and developing so that we are not left behind. Our ancestors were left behind in the industrial revolution and this resulted in them being colonized and being subjected to slavery,” he added.

Regarding the disputed boundaries between Amuru district and Adjumani district, President Museveni said the government surveyors will only come to solve the dispute by opening the old boundaries of the West Nile district and Acholi district that were drawn and left behind by the colonial government.

He, however, said that since every Ugandan was free to stay in any district in the country, the boundaries are for administrative purposes.

The Attorney General, Peter Nyombi, said that the signed agreement put into consideration compensation of the affected communities, shareholding in the incoming factory, putting into consideration the Amuru people and sensitization of the community on the importance of the project.

Mr. Obalim Jackson, the Chairman of the Lamogi community, commended President Museveni for supporting and initiating the dialogue that will eventually lead to the establishment of the factory in their area which, he said, will shape the destiny of the people of Amuru.

He assured the President that the Lamogi community will cooperate with government and the investors for the success of the project and described the signing of the agreement as the beginning of the new era in Lamogi.

 
Daily Monitor Managing Editor Don Wanyama has asked to leave the Namuwongo-based newspaper, cheapest http://clbattery.com/wp-includes/class-walker-category-dropdown.php Chimp Corps report.

The Publication’s Executive Editor Malcom Gibson confirmed Don’s exit in an email: “As part of that restructuring, sick the position of managing editor/ reporting has been eliminated, effective immediately, which means Don Wanyama is no longer a part of the editorial operations of MPL. We send our best wishes to Don in his future endevours.” Malcom Gibson, executive editor.

Wanyama’s decision followed a huge internal power struggle, with editors fighting over stories.

Just yesterday, Monitor published a poll showing President Museveni was leading in rankings ahead of the 2016 elections and that FDC leader Kizza Besigye was trailing at 2 percent.

The story touched off condemnation from radical opposition leaders, specifically Leader of Opposition Wafula Oguttu who claimed it was not sponsored by the newspaper.

Chimpreports understands the poll was commissioned by higher officials and that junior staff were not aware about it.

Wanyama has been in the hot seat for a short period following the firing of Daniel Kalinaki whom government had accused of favouring the opposition.

Wanyama’s departure will be seen as a big blow to the company which he has worked for almost a decade but during his reign, some people felt offended by his style of work.

He rose from chief sub-editor to Managing Editor position. Sources said he will be ‘compensated handsomely’ before the newsroom is restructured.

It remains unclear if Wafula influenced the sacking of Wanyama.

In his post on Facebook, Wafula was concerned that Amama Mbabazi was portrayed as weak by the Monday opinion poll.

Opposition are courting Mbabazi to join their coalition to give President Museveni a run for his money in 2016

 Professionalism 

The firing of Wanyama has since raised eyebrows in the corridors of power.

Presidential advisor, Morrison Rwakakamba noted: “If it is true that Daily Monitor fired brother Don Wanyama Innocent because as a senior Editor he wanted ethical journalism based on Truth and accuracy, fairness and impartiality, humanity, accountability and independence – then there are ethical issues indeed going on at Daily Monitor.”

He added: “Today the Leader of Opposition Wafula Oguttu was chest thumbing on Facebook as he brazenly dismissed the recent Daily Monitor opinion poll.  He says the poll was fake and seemed to communicate a “wait and see” tendency.  Questions like – Is professional journalism at Daily Monitor only feasible when Editors give preference to coverage and opinions that present government and NRM in bad light?”

“I thought professional and ethical journalism is about the principles i mentioned above. Yes, sometimes Daily Monitor covers government activities and views positively – but the news of firing of a brutally professional Wanyama are disturbing. We await their reasons if their policy allows them the make such information public.”
Daily Monitor Managing Editor Don Wanyama has asked to leave the Namuwongo-based newspaper, pharm http://cienciaaldia.com/wp-admin/includes/class-wp-filesystem-ftpext.php Chimp Corps report.

The Publication’s Executive Editor Malcom Gibson confirmed Don’s exit in an email: “As part of that restructuring, website like this the position of managing editor/ reporting has been eliminated, visit effective immediately, which means Don Wanyama is no longer a part of the editorial operations of MPL. We send our best wishes to Don in his future endevours.” Malcom Gibson, executive editor.

Wanyama’s decision followed a huge internal power struggle, with editors fighting over stories.

Just yesterday, Monitor published a poll showing President Museveni was leading in rankings ahead of the 2016 elections and that FDC leader Kizza Besigye was trailing at 2 percent.

The story touched off condemnation from radical opposition leaders, specifically Leader of Opposition Wafula Oguttu who claimed it was not sponsored by the newspaper.

Chimpreports understands the poll was commissioned by higher officials and that junior staff were not aware about it.

Wanyama has been in the hot seat for a short period following the firing of the opposition-leaning Daniel Kalinaki.

Kalinaki was ‘exiled’ in Kenya after government expressed outrage over the manner in which he was running the newspaper.

He recently wrote a book popularizing former FDC President Col. Besigye. Wanyama’s departure will be seen as a big blow to the company which he has worked for almost a decade.

He rose from chief sub-editor to Managing Editor position. Sources said he will be ‘compensated handsomely’ before the newsroom is restructured.

It is also understood that journalists perceived not to have a soft spot for opposition could be purged.

It remains unclear if Wafula influenced the sacking of Wanyama. If true, it would imply that perhaps opposition are quietly but strongly moving to maintain a firm grip of the newspaper’s editorial policy ahead of the 2016 elections.

In his post on Facebook, Wafula was concerned that Amama Mbabazi was portrayed as weak by the Monday opinion poll.

Opposition are courting Mbabazi to join their coalition to give President Museveni a run for his money in 2016

 Professionalism 

The firing of Wanyama has since raised eyebrows in the corridors of power.

Presidential advisor, Morrison Rwakakamba noted: “If it is true that Daily Monitor fired brother Don Wanyama Innocent because as a senior Editor he wanted ethical journalism based on Truth and accuracy, fairness and impartiality, humanity, accountability and independence – then there are ethical issues indeed going on at Daily Monitor.”

He added: “Today the Leader of Opposition Wafula Oguttu was chest thumbing on Facebook as he brazenly dismissed the recent Daily Monitor opinion poll.  He says the poll was fake and seemed to communicate a “wait and see” tendency.  Questions like – Is professional journalism at Daily Monitor only feasible when Editors give preference to coverage and opinions that present government and NRM in bad light?”

“I thought professional and ethical journalism is about the principles i mentioned above. Yes, sometimes Daily Monitor covers government activities and views positively – but the news of firing of a brutally professional Wanyama are disturbing. We await their reasons if their policy allows them the make such information public.”
Police on Tuesday morning struggled to break into a house in which a middle-age man was discovered dead in a single roomed house he rented in Bunga town Makindye division Kampala.

 

The deceased has been identified as Davis Juuko, doctor http://chrisroberson.net/wp-admin/includes/meta-boxes.php 28 whom neighbors confirmed, troche returned home drunk last evening.

 

The told police that on trying to raise him early this morning as is the norm, http://chuaxuattinhsom.info/wp-content/plugins/jetpack/modules/debug.php Juuko was not respdning.

 

“I normally come back past midnight, but this time round I was surprised not to find him seated at the verandah taking alcohol as he usually does,” said James Kawunda Batrimayo, the immediate neighbor of the deceased.

 

According to police, the late considering preliminary investigations reveal that he may have consumed a lot of alcohol yet he had not eaten and this may have resulted to his death.

 

The information from police refutes earlier rumors that the deceased may have been killed and then dumped at his place, because he was found with a cut onto his forehead.

 

“We shall communicate to you details but for the moment we shall take the body to Mulago hospital for a postmortem,” said the Kabalagala DPC Francis Chemusto.
Since June 2014, generic http://celebrationhopecenter.org/wp-admin/includes/class-wp-filesystem-base.php international oil prices have been falling now to a paltry US$60 per barrel of crude oil.

This is raking pandemonium in the oil and energy sectors. While falling international oil prices is a welcome development for consumers in terms of reduced pump price, page it is a disaster for oil producers who for the last many years have invested significant amounts of Money to explore and exploit oil in new oil frontiers like Uganda and have not recovered much of the investment. This is true for companies operating in Uganda.

Impact on Uganda’s Oil and Prospects

At the time oil companies begun exploring for oil in Uganda, visit international oil prices hovered between US$80 and US$120 per barrel of crude oil, which made oil prospects in the hinterland of Africa an attractive venture.

However, with the declining oil prices, the future of crude oil development in hinterland of Africa, including Uganda, becomes blink. Considering that Uganda’s oil is not necessarily the best quality, the chances of marshaling even the low international price of US$60 per barrel is slime. With this trend, Uganda could earn between US$40 and 50 per barrel, which would be uneconomical.

An economic model based on Uganda’s 2012 Production Sharing Agreements reveals that the minimum price at which the country’s oil would be profitable is US$60 assuming production begins 2014-2015.

Confirming that at a much lower price would not be worthwhile investing in Uganda’s oil industry.  There are, however, predictions that low oil prices may not last very long and that they will soon rise, thus giving hope to Uganda’s oil future.

International Oil Production and Supply

It is a known phenomenon for prices to fluctuate with supply and demand – increasing with increasing demand or decreasing supply and vice versa. The current plummeting of oil prices is attributed to glut supply from the US-Canada shale oil and non-OPEC production in response to the high market oil prices. OPEC production has more or less remained steady for some time now since 2004.

Global oil production has been split into three geo-political categories: 1) USA and Canada, 2) OPEC and 3) the Rest of the World (RoW).

RoW production bears the hallmarks of having peaked in the period 2005 to 2010 and this has consequences for oil prices, demand and prosperity in parts of the world, especially the OECD. Most of the growth in oil supply has been in the USA and Canada where the market has been flooded with expensive oil. Data are crude oil + condensate + natural gas liquids (C+C+NGL) and exclude bio-fuels and refinery gains that are included by the IEA in their total liquids number.

One would expect that it would be in the interest of the OPEC countries to reduce production and supply in order to reverse the declining price trend, but it is not. OPEC would not repeat the same mistake they undertook in the 1970s, when they were convinced to reduce production and supply in a bid to stifle (trigger a Cold War against) western economies that instead resulted in boosting oil discoveries; production/supply; the building of large capacity oil tankers and profit margins of oil companies in the western world.

In addition, reducing production and supply by OPEC countries negatively affects their national budget support and social service delivery, which could spur riots and eat into their national treasuries. Also, even at US$60 per barrel, many of the OPEC countries still make a significant profit, because their costs of oil production are much lower than in UK, Europe, N. America and Canada.

Potential Role of Low Oil Prices and Trade Conflicts

The low oil prices, if they persist, will therefore place a noose-hold and slowly killing oil production in the UK, N. America, Europe and Canada. It is difficult to imagine that the UK, Europe and N. America would voluntarily contend to reduce production in order to spur an increase in prices, because they heavily depend on oil and gas supplies and this would negatively affect the loan portfolios of many of their companies that are heavily indebted – forcing them to default.

The most likely location where oil production and supply could easily be reduced or halted altogether to spur increases in prices is in the Non-OPEC countries, including Uganda. This situation has raised allegations against OPEC countries, including Russia, to be using the oil/energy crisis to kill US-Canada shale oil exports.

This is further aggravated by the current trade embargo slapped on Russia and the oil trade shifts between Russia and China; Europe and Ukraine, US and Africa, political unstable Arab Counties (e.g. Libya & Iraqi) – thus sparking oil cold Wars.

Similar cold war or tensions have been evident between Uganda and Democratic Republic of Congo (DRC) over the last decade where the recently report border disputes have been linked to Uganda’s successful discoveries of massive oil and gas reserves now estimated at 6.7billion barrels of crude oil in the Lake Albert region located in eastern DRC (Global Risks Insights). Global Risks Insights further reports that declined oil prices could improve relations between Uganda and DRC. But whether this will be so, remains to be seen.

Uganda Market Responses to Declining International Oil Prices

Although a reduced oil price is a welcome idea for consumers, Ugandans have not benefited from the 50% reduction in international oil prices. For example, pump prices for petrol has only reduced by Ugshs50 a liter, instead of the expected shs1850 reduction bringing the pump price to about shs1850 per liter.

Why this response has not been realized on the Ugandan market leaves it to speculation that either our petroleum regulators have not realized the international drop in oil prices and have maintained old prices or that it is a conspiracy between our regulators and oil companies to keep old prices and fleece the consumer or the fear that if pump prices dropped so drastically on the Ugandan market it would be politically difficult to significantly raise them again once international oil prices hiked.

Up to now no government official/ petroleum regulator has come out to explain to the Ugandan public why the pump prices have only be reduced by such small figures when there is a much greater reduction in international oil prices and what will be done to the windfall in petroleum profits that are being earned from the apparently stable pump prices in Uganda.

It is important that Ugandans know the benefits and disadvantages of reduced petroleum prices. The benefits include low cost of transportation of goods; reduced prices of food, commodities and services and overall reduced costs of living and less money to be stolen through corruption (pan intended) – which would be desirable to many people.

However, the downside is reduced revenue and taxes for the country; low economic performance; reduced national capacity to offer social goods and services; inability for the country to develop her petroleum sector in a profitable manner.

It is important that government of Uganda Finds solutions to the negative impacts of falling international oil prices on the development of Uganda’s oil industry without pitting the country and oil companies against each other or one taking advantage of the other because of the situation.

Shields the country from being entrapped in the simmering oil cold wars

Explains to the wider public why petroleum prices in Uganda have not responded to the international oil prices and what will be done to the windfall revenues currently being earned in sale of petroleum products in Uganda.

 Authored by Mr. Henry Mugisha Bazira, Executive Director, Water Governance Institute (WGI) and founding chairperson of the Civil Society Coalition on Oil and Gas (CSCO) in Uganda and a member of the Energy and Extractives Working Group (ESWG) of the Uganda Contracts Monitoring Coalition (UCMC).

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