CNOOC Is Still Uganda’s Reliable Energy Partner Amidst EACOP Controversy

by Admin (Posted on October 6, 2022)

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By Moshi Israel.

In International Relations, a country’s political and economic success largely depends on the friends or enemies that country makes. Uganda is no exception to this rule and so far, the Pearl of Africa’s closeness to China is proving to be a wise decision. Time as usual shall be the ultimate judge of this relationship. As President Museveni has occasionally hinted, the oil and gas sector is vital for Uganda’s long-term economic development strategy. The discovery of oil is not an event any country can simply ignore. It represents many opportunities as well as potential dangers. The most significant step is for Uganda to be ready for all these eventualities by making well-meaning strategic partners. China, through China National Offshore Oil Cooperation is likely to be such a partner in the energy sector for Uganda, (CNOOC).

Many Ugandans were alarmed and taken aback when the European Parliament passed a resolution on 14^th September compelling Uganda and Tanzania alongside their partner TotalEnergies SE, to delay development of the East African Crude Oil Pipeline (EACOP) for at least a year citing human rights and Environment concerns. Whereas human rights and a clean environment must be top priority for every government around the world, the irony in this resolution cannot pass without notice. One needs to only check the list of countries from which the European Union imports its crude oil, solid fossil fuels (coal) and gas to assess the sincerity of the parliament’s resolution. Furthermore, it is important to remember that EACOP represents less than 0.1 percent of the operation global pipeline network of 1.18 million kilometers.

A closer look at the Kingfisher project by CNOOC, shows that Uganda is still on the right path to meeting targets with regards to environmental concerns, human rights through proper compensation and resettlement of persons affected by the oil project. CNOOC holds around 28.33% of the shares in the oil project alongside TotalEnergies SE (56.67%) and UNOC (Uganda National Oil Company), 15%.

In 2025, EACOP is expected to be online and the offloading of the first ship of oil is expected in the same year. CNOOC announced that it would invest USD1.6 billion in the kingfisher project with about $400m going to local providers. The Final Investment Decision (FID) was approved by CNOOC on 4^th November, 2021 and on 1^st February 2022, Uganda government announced the FDI. The Kingfisher oil field construction kicked off on the 11^th of February 2022 and the oil field is expected to be ready for startup by the end of 2024. The main facilities on the kingfisher project are to include; 4 well pads, one Central Processing Facility (CPF), water intake station. Supply base, permanent camp, temporary camp, safety check station, 47.6km feeder line to Kabaale including a high voltage cable plus road and other infrastructure.

As a researcher, over the weekend I visited CNOOC’s Kingfisher oil field project and from analytical perspective, CNOOC is doing a commendable job. The project has a plan for impact mitigation activities which involves stakeholder engagement activities. This is important because the plan which is already in practice seeks to quell doubts concerning the project by extending field visits to operation areas by key stakeholder groups such as special interests at all levels from national to the village level.

Additionally, CNOOC has an environment work plan designed to mitigate environmental risks caused by the project. The company completed an Environmental and Social Impact Assessment (ESIA) approval for a High Voltage Test Lab and feeder line ESIA in June, this year. The company also has an ESIA approval for Drilling Buffer Yard as of 14^th July 2022. Also, CNOOC completed ESIA for shoreline protection system and jetty structure on 13^th, July 2022. In August, the company rolled out the Monitoring and compliance register and a finalised legal compliance MS.

In context of jobs creation, the kingfisher project is currently employing over 2,715 Ugandans, which is over 78% of the total personnel. 280 total workers and 149 Ugandan nationals are directly employed by CNOOC and 2,436 by contractors. 524 of all the employees are from the local communities and there are 42 local subcontractors. These numbers are expected to increase as the project progresses.

CNOOC has also undertaken National Content activities aimed at benefiting Ugandans. These include supplier development engagements, enterprise development training programs that have trained over 150 small enterprises (SMEs) from the Albertine and Kampala regions with an additional 200 SMEs to be trained this year. The project has also implemented a community supplier development program to help farmers and small businesses to supply food and other items to the project. CNOOC has also trained and licensed 140 heavy goods vehicle drivers including a number of women. The project has facilitated training of over 126 trainers under its train the trainer program in Kichwamba and other vocational training institutes. Additionally, 230 welders have been trained and internationally certified in 2G and 6G coded welding.

When one takes a walk-through Kingfisher, it is easy to notice standard houses constructed by CNOOC for the locals who opted for this option instead of taking cash in resettlement money. The resettlement houses are up to standard with a kitchen, latrines and a tank collecting and supplying piped water purified by the company from a nearby stream.

In conclusion, the kingfisher project by CNOOC is a droplet of hope in an ocean of controversies surrounding the oil projects in Uganda. It is evidence that somethings can be done right. CNOOC is largely representative of Uganda’s partnership with China based on mutual respect and benefit for years to come. It is up to the Ugandan people and Government to make the oil project a blessing or a curse for the country. CNOOC is doing its part, it is up to the government of Uganda in collaboration with Ugandans and other stakeholders, to ensure that human rights are respected, the environment is protected and corruption not tolerated so as to alleviate some concerns from the international community.

It is also the responsibility of our international partners to make decisions based on facts and through research before taking a path that would destroy the livelihoods and shatter the dreams of millions of Ugandans, Tanzanians and East Africans likely to benefit directly or indirectly from the oil project.

Moshi Israel is a Senior Research Fellow at Sino-Uganda Research Centre.