Low costs, high risks, and empty promises? The price of oil in East Africa

Andrew Bogrand Climate Change, Land rights, Natural Resources

2020 has been brutal to the oil industry. Structural risks, global price wars, and the coronavirus pandemic, all against the backdrop of a climate crisis, have proved costly. Companies have closed shop and cancelled projects from the United States to Mozambique.

Despite plunging prices and major risks, oil projects are still moving forward around the globe. Among the most ambitious is a proposal to exploit some of Africa’s biggest reserves on the shores of Lake Albert in Uganda and ship the oil through Tanzania via a pipeline running beside Lake Victoria.

If constructed, the East African Crude Oil Pipeline (EACOP) would become the world’s longest heated pipeline. French energy giant Total is leading the project.

According to the company’s CEO, the projects are “in line with [Total’s] strategy of acquiring long-term resources at low cost.”

While the costs might be low, people around Lake Albert have already paid a high price for oil, including delayed compensation for their land. New community-based research from Oxfam, the International Federation for Human Rights, and local partners reveals how the risks of further exploitation are immense.

Communities that will be impacted are worried about their land, money, environment, and future. Oxfam is urging project developers and the governments of Uganda and Tanzania to listen to these communities and take immediate action.

The pending pipeline

Commercial quantities of oil were discovered in western Uganda in 2006. Expectations were high that the discovery of oil would quickly translate into significant new sources of investment and revenue. However, production is yet to commence and the crude remains landlocked in Uganda.

At a distance of 1,440 kilometres (900 miles) and at an estimated cost of $3.5 billion, the EACOP is one of the largest pending infrastructure projects in East Africa. The pipeline would transport oil from a pumping station near Hoima, Uganda to a storage terminal near the city of Tanga, on the northeastern coast of Tanzania.

After delays, governments have signed an agreement allowing for the construction of the pipeline and companies are on the verge of finalizing their investment decision. The route would pass through diverse ecosystems and human settlements as it winds its way east.

Lost land

Onshore oil projects require extensive amounts of land and these projects are no exception. If the pipeline moves forward, 12,000 families would lose land in Uganda and Tanzania.

Land is fundamental to the realization of many human rights and critical to the livelihoods of farming communities across rural Uganda and Tanzania. In both countries, people depend on their land for water, farming, grazing, and fishing. The pipeline would cross critical agricultural and fishing areas that have supported people for hundreds of years.

Women are especially vulnerable. Who signs land valuation forms and receives compensation payments is a major point of social contention in East Africa, where land is generally owned by men. Women are at risk of failing to see any benefit from the project.

Empty promises?

Many are holding out hope that the pipeline will come with real benefits. In both Uganda and Tanzania, oil projects affect rural areas with few job opportunities, underdeveloped markets, limited roads, poor sanitation, and patchy electricity. Companies and governments have touted the potential rewards of oil investment, but some communities are worried about “empty promises” – that oil will flow well before their money ever arrives.

Whether or not the money arrives, oil development will come with displacement and disruption. Families will need to farm new land, find new jobs, and send their children to new schools.

The environment on the line

Oil projects also come with substantial social and environmental risks. Any oil spill into Lake Albert, Lake Victoria, or Murchison Falls would have grave consequences on the region’s ecosystems and the diverse communities who rely on them. The watersheds from both lakes are vital to tens of thousands of people across East Africa.

With most of the impacts yet to come, communities are particularly worried about the future. They are concerned that oil development will contaminate their water, contribute to pollution, and impact their health for the worse.

A future beyond oil

Oil production in East Africa might bring welcome investment to Uganda and Tanzania, but it has already arrived with major disruption for communities impacted by current and proposed projects. If these oil projects are to move forward, project developers and national governments must reconsider their approach, put communities at the centre of their decision-making, and help them prepare for a future beyond oil.

Going forward, this means

  • Ensuring fair, transparent and just compensation processes.
  • Following international best practices and utilizing the best available technologies.
  • Committing to a free, open, informed, and fair conversation about oil development, which includes the risks.
  • Assessing the contribution of these projects to the climate crisis.

It is clear that companies and governments must take immediate action to respect the rights and protect the future of communities at risk in East Africa’s oil frontier.

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Andrew Bogrand