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Catalyst or Curse? East Africa’s Oil and Gas Boom

As he delivers his lecture from the breezy, pink-hued classroom, Robert Rutaro is optimistic about Uganda’s future in oil.

An attorney with a master’s degree in oil and gas law from Scotland, Rutaro returned home this January to find a job in Uganda’s Ministry of Energy and now doubles as a lecturer at the Institute of Petroleum Studies-Kampala (IPSK), a two-year-old university offering a range of degree programs in oil and gas sector management. Since 2006, when the Anglo-Irish firm Tullow discovered East Africa’s first commercially viable oil in the vicinity of Uganda’s Lake Albert, the country has been at the forefront of an emerging hydrocarbons boom that analysts say has the potential to transform the region. Now, despite oil’s highly dubious record of driving development elsewhere on the continent, as well as evidence that Uganda’s nascent industry is already plagued by corruption, Rutaro and his 20 undergraduates are betting their careers on the sector.

“Uganda has an estimated 6.5 billion barrels in the Albertine Graben,” he tells his Fundamentals of Oil and Gas Law students during their first class of the semester, referring to a region in western Uganda. “But 60 percent of the basin is yet to be explored. We could become a very significant producer.”

A New Frontier

A decade ago, Uganda, along with Africa’s wider Great Lakes region, was little more than a footnote in the global hydrocarbons industry. Local fishermen have reported oil seepages on Lake Albert for generations, and wildcat outfits began drilling near its shores as early as the 1930s. However, with the exception of then-unified Sudan at its fringes, the region was long considered what the consulting giant Deloitte has termed a “sleepy backwater for the upstream industry.” With crude oil priced below $40 per barrel from the mid-1980s to the mid-2000s, and the Albertine Graben more than 700 miles from the nearest coast, drilling in the region did not make economic sense. Oil majors left East Africa largely untouched, focusing instead on the western part of the continent, where reserves were more easily recoverable and closer to the sea.

By the late 1990s, however, as a handful of small, equity-funded firms like Tullow began scouring parts of the world the majors had missed, countries like Uganda, where exploration licenses were cheap, finally started to draw attention. After Tullow, in 2006, made Africa’s biggest onshore discovery in 20 years at Lake Albert, interest in the region spiked. More than 70 exploration wells later, the company estimates it has found 1.7 billion barrels of recoverable oil reserves in Uganda, with total reserves of 6.5 billion barrels according to the Ministry of Energy. That is enough to make the country a mid-sized producer within a decade.

For the complete article, please see World Politics Review.