A worker at an oil rig. Photo/FILE
Nation Media Group
By JOINT REPORT The EastAfrican
In Summary
- The Petroleum (Refining, Gas Processing and Conversion, Transportation and Storage) Bill 2012 is the second of three new laws to be passed by parliament.
- The new law gives power to the Minister of Energy to grant, suspend and revoke oil and gas licenses.
- However, observers said the new laws do not promote transparency but rather confidentiality, the environmental protection aspect is weak, and that they will not promote investment in the oil sector.
Uganda’s passing of the second new oil and gas
law in February, moves the country closer to finalising the regulation
of the sector.
The Petroleum (Refining, Gas Processing and
Conversion, Transportation and Storage) Bill 2012 is the second of three
new laws to be passed by parliament.
Like the first one passed in December, the
Petroleum (Exploration, Production and Development) Bill 2012, the new
law gives power to the Minister of Energy to grant, suspend and revoke
oil and gas licenses.
Among other infrastructure projects, the new bill deals with a refinery Uganda wants to construct to process its crude.
The law has also put in place a National Oil Company, and a Petroleum Authority.
In addition, the minister has the power to
initiate, develop and implement policies for midstream operations. The
new bill also addresses protection of the environment by barring wanton
waste disposal, has penalties for oil spills, and clear procedures of
decommissioning refineries with other facilities.
Minister of Finance Maria Kiwanuka said the
government has put the new oil policies, laws and institutions in place
to ensure prudent management of the mineral resources, given the
volatile nature of prices.
Parliamentary spokesperson Helen Kawesa said the
House hopes to pass the pending Oil Revenue Management Bill soon, to
complete regulatory framework of the oil and gas sector.
Uganda has about 3.5 billion barrels of oil
reserves. Three companies — Tullow Oil, Total and China National
Offshore Oil Corporation — are expected to invest about $10 billion in
the development of oil fields.
Junior Energy Minister Peter Lokeris said Uganda
has received a lot interest from prospective investors, but negotiations
for the refinery project could not start as the legal framework was yet
to get presidential assent.
He said passing the second oil law will tighten
the regulatory framework, and that 13 new explorations areas are set to
be licensed.
The new law covers refining, transport, and
storage of petroleum products when crude oil production starts in the
Albertine Graben, the oil producing region, near Lake Albert.
In 2011, Uganda put a moratorium on granting exploration licences until all the relevant laws are in place.
However, observers said the new laws do not
clearly explain how the National Oil Company will be governed. They said
the laws do not promote transparency but rather confidentiality, the
environmental protection aspect is weak, and that they will not promote
investment in the oil sector.
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