How Trump, Energy Security Favor Uganda’s Oil

Uganda’s oil and gas developments are is poised to move forward with less opposition from anti-fossil fuel opponents going by latest developments in the energy politics globally. The reelection of President, Donald Trump to White House breathed new life for American fossil fuel backers. 

Captains at Amber House in Kampala and at the Petroleum Authority of Uganda expect that the Americans and their banks could return and take part in Uganda’s oil development projects.

In April 2018, an American led Albertine Graben Refinery Consortium (AGRC) had singed a Project Framework Agreement with the government for the development, design, financing, construction, operation and maintenance of a 60,000 barrels per day oil refinery in Hoima.

The AGRC comprises Nuovo Pignone International SRL (a General Electric Company located in Italy), YAATRA Africa (Mauritius), Lionworks Group Limited (Mauritius), and SAIPEM SPA (Italy).  The Project Framework Agreement was ended in 2023.

Trump in his inaugural address in January said America will “Drill, baby, Drill” adding that “We have something that no other manufacturing nation will ever have – the largest amount of oil and gas of any country on Earth, and we are going to use it. We’re going to use it.”

Donald Trump also signed an orders to promote fossil fuels and end climate policies. Trump further signed an executive order to revoke President Biden directive on the controversial Keystone XL pipeline. The 1200-mile oil project whose construction was to cost $8 billion has been on halt.

It has been rejected by President Obama, Trump approved it during his first term in office, and President Biden stopped its construction. Trump revoked Biden’s decision. 

Ali Sekatawa, the Director for Legal and Corporate Affairs at the Petroleum Authority of Uganda (PAU) is among those that believe that the reelection of President Trump and his energy policies could breathe new life into the oil and gas development. 

“You can look at that phase of the Keystone. From President Obama to Trump One. Trump licenses it, and then Biden comes. Stops it. And it under consideration under Trump II,” said Sekatawa.

Sekatawa was speaking at a dialogue of oil and gas payers at Protea Hotel in Kampala. The dialogue under the theme “Changing Global Landscape: Implications for Uganda’s Extractives Sector” was supported by Natural Resources Governance Institute (NRGI).

NRGI has organized similar dialogues around the Extractive's sector in Uganda as part of the efforts to ensure informed, inclusive decision-making about natural resources and the energy transition.

Uganda's oil and gas projects, particularly the East African Crude Oil Pipeline (EACOP), faced opposition from anti-fossil fuel activists. Some of the opponents of the projects were fueled by campaigners from the global north. With calls to phase out fossil fuel globally, there was fears that the assets could be stranded in the near future.

Sekatawa says the decision by Donald Trump to withdraw from the Paris Agreement has allowed some of the major Banks in the United States of America to follow.

Apart from the political developments in America, Sekatawa said the movement of elections in the UK from the Conservatives to the Labour Party could favor the developments of fossil industry including the developments in Uganda.  

“If you look at the pledges of both the governments, at least none of them had committed or was committing to a phase out of fossil fuels. They had all acknowledged the reality that fossil fuels will need to be sustainably exploited and there are issues of national security” he explained.

 “The new pledges of Sir Keir Starmer, one of them is bringing down energy costs. And of course when you drill further, there is licensing of new areas, there is exploitation of gas which is consistent with the discussion of not phase out of fossil fuels but systematic transition” 

The United Kingdom government has in the past not been providing funding for oil and gas projects in Uganda. It had effectively withdrawn its support for the development of Uganda's petroleum industry due to environmental concerns.  

Some of the big banks and insurers in the UK planned to finance the Eat African Crude Oil Pipeline project (EACOP). They withdrew following intensification of the “#StopEACOP" protests by anti-fossil campaigners.

However some companies defied the odds tao take up job in Uganda's oil sector. UK-based firm WorleyParsons Europe limited in joint venture China Petroleum Pipeline Engineering Co. Ltd is undertaking the construction of the EACOP. 

Worley is progressing with its execution of the engineering, procurement, construction management, and commissioning contract related to the EACOP, with civil works at the main camps and pipe yards.

According to Sekatawa, the war in Ukraine greatly tilted debate on the energy landscape around the world including the stance on phase out of fossil fuel.  

“As you know opposition against fossil fuel had greatly picked until the Ukraine-Russia where it was very clear that energy security is very important. And you can list close to five projects in respect to the energy security map in Europe including a pipeline coming from North Africa,”   

From the events around the world, Sekatawa is of the view that the energy landscape around the would has moved away from the very radical phase out of fossil fuel and the very “unfair” opposition that new oil producers like Uganda had faced.  

“We now have a more middle ground position of saying countries can be left to produce their resources sustainably with a view of also answering the reality. As a result, you then fall into the boardroom. Because there is the politics, the landscape globally, and where the business is. And the business is in the boardroom”

Effect of the Multipolar World Order 

Some analysts have suggested that the new multipolar world order will have an impact on global energy governance including financing. 

Uganda has already begun reaping as the multipolar world takes shape. Sekatawa explained that the North has realized that it no longer holds the shots. 

“Because at any point where there have withdrawn either as a bank or as an insurance company, or as license entity, there companies that come from the global south especially like China and South America that are stepping in. And you look critically, there is no single project that has not been financed because the US or EU companies have pulled out”

He said whenever companies from the EU or US have not come in to sponsor money from other parts of the world has come in. “Money has no color. It comes from other countries because the world still needs these fossil fuels,” he said.   

UN Climate Change Conference Decisions

Uganda is among the new oil producers that have pushed against total transition from fossil at the past UN Climate Change conference including at the last one in Baku. 

While COP28 in Dubai called for transitioning away from fossil fuels and aligning climate pledges with the 1.5°C target, COP29 was viewed as a reversal in ambition, as there was no agreement on phasing out of fossil fuels. 

New producers like Uganda and oil-rich countries were reluctant to push strong action on cutting fossil fuels saying it could jeopardise their economic growth.

“COP29 moved away from the language of phase out oil and now it is transition from.  You know that the last 2-3 COPS, the main language which was being pursued by Climate activists was phase out because it was seen as the major exit out of the major clime issue,” 

Sekatawa explained. COP29 talks on measures to cut emissions and progress a landmark agreement on “transitioning away from fossil fuels” had to be rescued from the brink of collapse by the COP presidency after opposition from oil-rich Saudi Arabia and some other developing countries.

TotalEnergies E&P Uganda, CNOOC Uganda Ltd, and the Uganda National Oil Company (UNOC) are developing the $6-billion upstream Tilenga and Kingfisher projects which together with the East African Crude Oil Pipeline (EACOP) ($5 billion) and the Uganda Refinery project ($4 billion) represent a combined investment of approximately $20 billion into Uganda's economy.

Negotiations are ongoing with the UAE’s Alpha MBM Investments LLC for key commercial agreements related to the development of the Uganda refinery which will supply the country’s domestic petroleum needs as well as demand of the greater East African Community.