http://www.economist.com/node/14177583?story_id=14177583&source=hptextfeatureAug 6, 2009. TULLOW OIL, an Anglo-Irish exploration firm, announced on August 4th that it had struck oil while drilling in Uganda near the shores of Lake Albert. It was the tenth discovery in the area. Indeed, oil firms do not seem able to drill a well in Western Uganda without hitting the stuff. That part of Africa had long been seen as something of a wasteland by oilmen. But now an oil rush is under way.
James Arnold of Tullow says there are 700m barrels of proven reserves on the Ugandan side. With likely additions from further exploration, he believes, the figure could eventually reach billions of barrels. Some speculate that, Congo included, the entire Albertine basin may yield even more than Sudan’s 6 billion barrels of proven reserves.
Within a few years Uganda could be producing 100,000-150,000 barrels a day (b/d). But where will it go? Some might be used to generate electricity, of which Uganda is desperately short. That could put an end to persistent blackouts and boost local manufacturing, which has withered on unreliable and exorbitantly priced electricity. The country’s president, Yoweri Museveni, has made it clear he wants a big refinery built. The oilmen politely disagree, arguing that east Africa’s economy can absorb only a fraction of the petrol and other products a full-sized refinery would turn out. They would prefer a much smaller facility, consuming perhaps 30,000 b/d, with the balance being pumped across neighbouring Kenya to the Indian Ocean.
Mr Pearmain points out that Ugandan oil is waxy, and so likely to solidify in a pipeline unless heated. Building such a pipeline will cost at least $1.5 billion. Iran has offered to invest, and has been advising Mr Museveni’s government. America, too, says it is willing to help. But China seems the likeliest investor. Speculation is rife that Mr Museveni will sign an agreement with one of China’s acquisitive state-owned oil firms at an Africa-China summit in November. Meanwhile, in Kenya, which has long lorded it over its poorer neighbour, exploration firms keep drilling dry holes, to Ugandans’ delight.
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