Oil and Gas Countdown: Why the economics of Uganda’s oil are changing

What the report says

Uganda’s oil sector is entering a new phase as construction advances on the Tilenga and Kingfisher fields and the 1,443-kilometre East African Crude Oil Pipeline, following the country’s Final Investment Decision in February 2022. The Independent Uganda, citing URN and analysis from several institutions, says the project has already brought roads, airport work, drilling activity and contracts for local firms, while also generating licence fees, taxes and other payments for the state.

The article focuses on a growing debate over whether the economics of the industry have worsened since the plans were first approved. The Institute for Energy Economics and Financial Analysis argues that delays, higher construction and financing costs, post-pandemic supply chain disruptions and the shift toward lower-carbon energy could reduce the fiscal gains Uganda expected. It says projected revenues may be concentrated in the first decade of production, rather than spread evenly across the life of the fields.

A separate view from the Natural Resource Governance Institute stresses that the key issue is how oil earnings are managed, given that Uganda’s reserves are finite and may last 25 years or less. The report calls for stronger institutions, transparent rules and prudent fiscal planning. By contrast, MCB Research says oil-linked investment is already supporting growth, reserves and investor confidence. Taken together, the assessments show that the debate has moved from whether Uganda has oil to how much value it can capture and whether that wealth will support broader development.