Uganda has signed two oil production agreements with an Anglo-Irish firm, Tullow oil. The agreements allow the company to finalize a long-delayed $2.9 billion asset sale to France’s Total and China’s China National Offshore Oil Company (CNOOC).
As a result of this signing, according to a Uganda government official, Tullow will finalize arrangements with CNOOC and Total for completion of a "farm-down," which will partly divest its assets in Uganda to the two oil companies as agreed.
The government says that Tallow has met all the government’s demands, including agreeing to an oil refinery being built in Uganda, and a potential for a pipeline to export crude oil if more deposits are discovered.
The agreements have been signed amid protests from members of parliament who last year passed a resolution stopping the signing of oil contracts without relevant oil laws in place. In October last year, Parliament gave government 30 days to table these laws, but so far none has been brought before parliament.
“I am shocked and surprised,” said Theodore Ssekikubo, member of parliament for Lwemiyaga County. “This is a matter that parliament will have to consider.”
He said Parliament still has options and will decide, in due course, what action to take.
The options, he said, are Parliament looking at the legality of this matter or deciding to resort to the courts of law. “Certainly this [action by government] goes against the spirit of the parliamentary resolution. It is a challenge to the Parliament of Uganda; it’s a challenge to the people of Uganda.”
Ssekikubo also questioned the legality of Tallow’s interests in Uganda’s oil, saying the memorandum of understanding the oil company signed with government is illegal, and should not have been a basis for entering into new contracts. “What they claim to have acquired is not theirs in the first place.”
He said many members of Parliament are determined to defend the interests of the people of Uganda. “There is no way you can justify the signing of these agreements before resolving the issues raised by Parliament.”
Even Tallow Oil, he added, knows its claim of ownership is being challenged in court. “I think the whole transaction is under suspicious circumstances.”
There are five running Production Sharing Agreements, the most important being the $2.9 billion transaction in which Tullow is to bring on board Total and CNOOC to jointly undertake production, transportation and distribution activities.
Last year Parliament was recalled from recess to debate these (hitherto) secretive oil deals. During the debate, Prime Minister Amama Mbabazi, Foreign Affairs Minister Sam Kutesa and Internal Affairs [former Energy] Minister Hillary Onek were named as allegedly having taken bribes from oil companies.