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Sunday, August 31, 2014

Oil law takes Uganda closer to regulation


A worker at an oil rig. Photo/FILE
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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