Cnooc Eia Certificate Signals Marginal Progress For Uganda’s Oil Industry

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CNOOC EIA CERTIFICATE SIGNALS MARGINAL PROGRESS FOR UGANDA’S OIL INDUSTRY

On March 5, 2020, CNOOC Uganda Ltd President Zhao Shunqiang received an Environmental Impact Assessment Certificate from Uganda’s National Environment Management Authority (NEMA). Under Ugandan laws, an environmental impact assessment certificate is a mandatory requirement for investments that are likely to have a significant impact on the environment. China National Offshore Oil Cooperation (CNOOC) is in a joint venture partnership with Tullow Oil (U) Ltd and Total E&P (U) B.V to develop Uganda’s oil resources. Uganda discovered commercially viable quantities of oil in 2006. Major reforms including the promulgation of a national policy on oil and gas in 2008, enactment of a wide range of laws in 2013 and the subsequent realignment of public sector institutions to ensure efficient governance of the sector have been implemented. However, progress has been hampered by lack of transparency in the decision-making process, political uncertainty and an unpredictable tax regime resulting into regular tax disputes. On August 20, 2019, Tullow announced it had terminated the sale and purchase agreement of the bulk of its stake to CNOOC and Total as a result of their failure to reach an agreement on capital gains tax with Government of Uganda. For now, the country’s oil sub-sector continues to be plagued by shifting production deadlines and communities in the Albertine rift struggling to protect their land rights. With the issuance of the EIA certificate, one important hurdle has been cleared. But can it unlock the logjam that is slowing down the sector? Most likely, we will have to wait until the 2021 general elections to have a Final Investment Decision (FID) made to get oil production agenda on a predicable pedestal.            

 

 

 

 

 

 

 

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