OIL INDUSTRY

HAS THE TIME FOR NEW OIL INVESTMENT IN AFRICA PASSED?

INTRODUCTION

At the beginning of February 2022, Uganda announced a $10 billion investment in a new oil field. This was in partnership with a French and a Chinese company. From 2025, they hope to begin producing the first of 1.4 billion barrels of oil from the region. Some people argue that the environmental impact of such investment means that it results in more harm than good. Others argue that developing countries have the right to benefit from their natural resources.

WHAT WILL THE ENVIRONMENTAL IMPACT BE?

There will be environmental damage caused by this investment. Large areas of grazing land have been cleared. People have also been displaced from farmland. Some of these people are yet to be compensated. The construction work also releases pollutants. This can cause people to experience breathing difficulties.

On top of this, there are environmental impacts of producing oil more generally. As a fossil fuel, it releases large amounts of greenhouse gases into the atmosphere when it is used. This contributes to global warming. Also, there is the risk of oil leaks which have proved particularly damaging in countries such as Nigeria. In particular, leaks into water sources reduce access to drinking water and damage fish reserves.

IS IT UGANDA’S RESPONSIBILITY TO COMBAT GLOBAL CLIMATE CHANGE?

Some of the environmental damage from oil investment is local. However, a lot of the criticism of Uganda is about the impact of oil investment on global warming. But is this Uganda’s responsibility? Let’s assume that Uganda produces as much oil as it can from this new oil field. Its fossil fuel output will still be small in comparison with major powers like the USA, Russia, or Saudi Arabia. These countries with very large reserves are already much better off than Uganda. They have also been exploiting their oil reserves for many years already.

As a poorer country, Uganda would feel more economic benefit from oil extraction than more developed countries. The oil industry provides employment opportunities and a source of government revenue. This can be invested in public services like health and education. These benefits have already been enjoyed by other countries.

It seems unfair to suggest that Uganda cannot benefit from oil extraction just because the environmental impact is now better understood.

CONCLUSION

There are several reasons why it may not be a good idea for countries in Africa to invest in new oil projects. The damage to the local environment can be significant. Also, there are questions about whether it makes economic sense now that there is more emphasis on green energy around the world.

However, it may be unfair to suggest that countries like Uganda should not invest in oil. More economically developed countries produce far more fossil fuels. They are also more able to achieve high living standards without fossil fuels. Therefore,  the responsibility to reduce production to sustainable levels should be in developed countries. This is a fairer and more effective way of combatting climate change.

Jed Michael

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