Uganda's oil deal fuels concerns

Secret agreement with British company does not offer adequate safeguards

The gas flares that have blighted the Niger Delta are set to arrive in Uganda in the next year under the terms of a secret deal between the East African government and a British oil company.

Uganda is believed to be sitting on the largest onshore oil reserves in sub-Saharan Africa but there are mounting concerns that the influx of petrodollars could encourage corruption and degrade the environment.

Leaked documents released yesterday by the oil watchdog Platform have done little to dampen those concerns as the production-sharing agreements between London-based Tullow Oil and the government in Kampala contain few environmental safeguards while guaranteeing the company what the NGO calls "excessive profits".

"The confidential documents we have published make clear that the corporations and the government cannot be trusted to protect the Ugandan people from the negative impacts of oil extraction," said Platform's Kampala researcher Taimour Lay.

The production-sharing agreements (PSAs), which the Ugandan government had refused to publish, pave the way for the controversial practice of gas flaring, which has repeatedly been outlawed but continues around the clock in Nigeria. This is the process in which unwanted natural gas tapped during production is burned.

Article 19.3 of the PSA, leaked by Platform, reads: "Associated gas which is not used in petroleum operations, and the processing of which, in the reasonable opinion of the licensee, is not economical, shall be returned to the subsurface structure or may be flared."

In the last three years, oil finds thought to total 1.7 billion barrels have been made in western Uganda's Lake Albert region, with production due to begin within the next 12 months. Oil exploration specialists Tullow and their partner Heritage Oil, who between them control the majority of Ugandan finds, are thought to be close to a deal to sell on their holdings to one of the oil majors such as the US giant Exxon.

The impact of large-scale oil production in sub-Saharan Africa has come to be known as the "resource curse" as massive, centralised earnings from export have proved easy to siphon off for corrupt officials. A list of major oil producers from Nigeria to Sudan, Equatorial Guinea and Angola reads like an index of corruption and human rights abusers.

Uganda's long-serving president Yoweri Museveni has rejected the example of Nigeria, whose oil wealth has helped to spread poverty, destabilise the country and destroy the natural habitat in the Niger Delta, instead promising to follow in the footsteps of Norway.

However, a confidential audit of foreign oil operations carried out last year by Ernst and Young warns of companies inflating their costs and avoiding responsibility for oil clear-ups. Typically oil companies could expect a return on their investment of between 12 and 20 per cent but the Ugandan deal promises profits of up to 35 per cent.

"It is unfortunate that the Ugandan government chooses to emphasise the risks of the operations to justify the contracts it has signed, rather than renegotiate a fairer deal," Platform says.

"Uganda is heading towards oil production in 2010/11 with no oil legislation yet in place, no revenue management system, and is locked into contracts that undermine the country's sovereign control over its own natural resource."

Tullow has refused to discuss the specifics of its agreements with Uganda but continues to insist that it upholds international and industry accepted standards in its dealings.

Tullow said that in principle there would be no continuous gas flaring at their Uganda facilities except in emergency situations. "Any flaring would be conducted to industry best practice standards and visual pollution would be minimised," said a spokesman.

The oil exploration firm also denied they were in line for "excessive" profits "when weighed against the $600m investment already made in Uganda by Tullow, the exploration risk the Company took on and the further substantial investments which will be required to develop the discoveries."

Suggested Topics
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete tomorrow
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
peopleBroadcaster has a new role bringing 'the big stories that matter' to US
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Life and Style
Moves to regulate e-cigarettes and similar products as medicines come amid increasing evidence of their effectiveness
healthHuge anti-smoking campaign kicks off on Wednesday
Life and Style
fashionEveryone, apparently
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
Arts and Entertainment
Shia LaBeouf is one of Brad Pitt's favourite actors in the world ever, apparently
filmsAn 'eccentric' choice, certainly
Life and Style
An Internet security expert has warned that voice recognition technology needs to be more secure
techExperts warn hackers could control our homes or spend our money simply by speaking
peopleBenjamin Netanyahu trolled by group promoting two-state solution
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

1st Line Service Desk Analyst

£27000 - £30000 Per Annum: Clearwater People Solutions Ltd: Our client who are...

Trainee Recruitment Consultant - Manchester - Computer Futures

£18000 - £23000 per annum + Commission: SThree: Computer Futures (an SThree br...

Supply teachers required for secondary schools in Peterborough

£21000 - £35000 per annum: Randstad Education Cambridge: Secondary supply teac...

English Teacher - January

£120 - £162 per day: Randstad Education Hull: English Teacher A Hull school i...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style