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Opinion: Uganda should consult Ghana on oil

Good planning and transparency should help population benefit from new find.

A fisherman and his children wind up a fishing net in the village of Ntoroko, on the shores of Lake Albert, Oct. 24, 2007. To local fishermen, Lake Albert is a lifeline providing food and income, but large oil deposits have been discovered under the lake and will change the economy of the area, possibly threatening the local fishing. (Tim Cocks/Reuters)

KAMPALA, Uganda — In 2009, Uganda discovered oil reserves in its side of the Lake Albert Rift Basin that could place it in the ranks of major African producers such as Chad and Equatorial Guinea.

The oil discovery — optimistic estimates place it at 2 billion barrels — is just a fraction of the 36 billion barrels of proven reserves held by Nigeria, but it still means a windfall for Uganda.

Almost immediately, the debate started — will the oil help Uganda develop, or will the country fall prey to Africa's resource curse?

Too many times in sub-Saharan Africa, natural resources — oil, diamonds, or minerals — do not bring wealth to the population but instead bring corruption, misgovernance and continued poverty. In an effort to avoid all that, Ugandan President Yoweri Museveni announced in his recent state of the nation address that the country will draft new oil legislation this year.

Uganda has very little domestic expertise on the oil and gas industry, let alone expertise on how to craft policy to regulate it. As Uganda forges an oil policy, it should consult Ghana.

Ghana discovered oil in 2006 after decades of exploration, and it expects to begin producing oil in late 2010. For the past two years, it has been developing legislation to manage its oil revenues responsibly. In late 2008, the country held successful presidential elections, in which the winner, John Atta Mills, had a margin of under one percentage point.

Despite the high stakes — whoever won the election would benefit from the economic boost of the oil — the election result was not contested. Like his predecessor, John Kufuor, Atta Mills has stressed that Ghana must be fiscally responsible and not pin its economic hopes on oil.

Uganda could learn from Ghana’s careful approach to managing its oil resources. The two countries are working with one of the same independent oil companies, the London-based Tullow Oil. In Ghana, Tullow holds a majority stake in the Jubilee Field, estimated to contain between 600 million and 1.8 billion barrels of oil. This field is roughly the same size as the one Tullow has discovered in Uganda.

In Uganda's Lake Albert Rift Basin, Tullow holds stakes in two blocks estimated to contain between 700 million and 2 billion barrels of oil. The Ghanaian government has had several years of experience working with Tullow, and could advise Ugandan officials on how to work with the company. Further, through sharing information, the two countries could see if there are opportunities to negotiate more favorable contract terms.