In 2006, Uganda’s hopes of developing an oil industry were boosted by the confirmation of “commercially recoverable” quantities of oil in the Albertine Basin. By 2013, three international oil companies were lined up to develop the oil fields with first oil expected in 2018.

Uganda’s government had high expectations that the exploitation of this resource endowment, could be the means by which Uganda could lift its economy to middle income status within a decade, bringing with it jobs, fuel supply security and most importantly, foreign currency revenues.

Uganda’s low-cost reserves were heralded as part a growing wave of investment to open up East Africa as a new frontier for oil and gas exploration, from Kenya in the north to Mozambique in the south. At that time, the c. 1.6 billion barrels of commercially recoverable reserves could have been worth (based on the net present value of future cashflows) $61 billion based on CPI’s long-term oil price projection from time of the original planned FID of 2015.

At the end of 2020, first oil has not yet flowed as decisions to invest continued to be delayed and global oil markets have changed after five years of turmoil and volatility.

In the analysis, we examine the reduction in value of three main assets. The oilfields themselves in the Albertine basin; the controversial East African Crude Oil Pipeline; and the Hoima oil refinery. Our key finding is that since Uganda signed an initial agreement in 2013, the value of Uganda’s oil reserves has fallen more than $40 billion or over 70% to $18.1 billion. Under a low-carbon transition aligned with the goals of the Paris Agreement, the value of the oil would drop further, to 88% of its value seven years ago.​

This analysis is part of our global sovereign risk programme exploring the impact of the climate transition on public finances and financial stability and follows on from our work in South Africa in 2019:

Watch the webinar launch here:


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