Uganda, Other African Nations Push for Fossil-Fuel Projects
By Nicholas Bariyo, Feb. 20, 2023, WSJ

MURCHISON FALLS NATIONAL PARK, Uganda—A herd of elephants stomped through savannah grasslands to the throbbing sounds of bulldozers preparing oil wells that will soon start feeding a 900-mile pipeline from this wildlife and nature reserve.

The $10 billion project has become a flashpoint in the global battle against climate change, as some African governments with unexplored natural resources seek to resist a global push to limit investment in new fossil-fuel projects.

Opponents such as the U.S.-based Climate Accountability Institute, France’s Friends of the Earth and the European Parliament say the pipeline, which needs to be heated to 50 degrees Celsius (122 degrees Fahrenheit) to keep Uganda’s waxy crude liquid,
would produce 34.3 million tons in annual greenhouse-gas emissions, while the wells will pump oil the world can no longer use if it wants to limit global warming in line with international agreements.

But the governments of Uganda and Tanzania are arguing that they can’t afford not to exploit their natural resources while the world still runs on fossil fuels. It is unfair, they say, to ask poor countries to safeguard global carbon sinks and nature
reserves that rich Western countries, which are responsible for most historic emissions, destroyed long ago in pursuit of their own economic development.

“Nothing will stop this project,” Uganda’s President Yoweri Museveni, said from the garden of his official residence in Kampala. “We shall not accept any pressure from anybody. We know what we are doing.”

TotalEnergies SE is building 10 well pads inside Murchison Falls National Park, Uganda’s largest, where the Nile River crashes through a narrow gap in the jungle and some of the world’s largest remaining populations of giraffes, buffaloes and lions
live. Together with China’s Cnooc Ltd. and the governments of Uganda and Tanzania, the French company also plans to construct a pipeline to transport the crude from those wells and others nearby to the East African coast and with it to global export
markets.

“We have to stay on the lookout for any threats from animals,” said Sam Mugwere, one of three park rangers armed with AK-47 rifles and stationed around the construction site. “Sometimes we shoot in the air to scare away charging elephants.”

Fitch Solutions estimates that Uganda could earn as much as $2 billion a year in taxes and royalties from the 230,000 barrels-a-day fields and the pipeline, a significant bump to the $4.5 billion it currently collects in domestic taxes.

The increase in oil-and-gas prices over the past year has boosted other African governments’ interest in developing new fossil-fuel projects—and has also triggered international pushback. Uganda’s neighbor, the Democratic Republic of Congo, has
faced criticism, including from the Biden administration, over its plans to auction off oil-and-gas drilling sites inside its famed Virunga National Park, home to some of the world’s last remaining mountain gorillas, and peatland and rainforest areas
that absorb carbon.

Further south, the government of Namibia is under pressure from the United Nations to put a stop to exploratory oil drilling in the Okavango Delta, a Unesco World Heritage site. The public criticism could damage African leaders’ reputations and even
limit funding and aid in the future, say economists at Oxford Economics Africa.

The moves aren’t confined to Africa. In Mexico, President López Obrador has bet big on fossil energy. He is building a large oil refinery, the first one in the country since 1979, which is expected to start production in July, and ramped up public
investment in oil exploration and production.

In response to criticism from the U.S. and enviro groups, López Obrador has said that climate change became a fashionable topic among rich countries and accused some them of being hypocritical for defending reducing gas emissions while at the same time
boosting oil output.

In the case of the East African Crude Oil Pipeline, more than a dozen international banks and insurers—including HSBC, Barclays and major French lenders that have helped finance previous TotalEnergies projects—have publicly said they won’t support
it. Friends of the Earth said that in addition to contributing to greenhouse-gas emissions, the project endangers local ecosystems and wildlife habitats, and is already displacing vulnerable communities from their homes and livelihoods.

“It is now clear that most financial institutions want to keep away from projects deemed harmful to the environment.” said Onesmus Mugyenyi, who heads the Environment and Natural Resource Governance Program at Advocates Coalition for Development and
Environment, a Uganda-based think tank.

TotalEnergies says it is confident it can raise the financing necessary to build the pipeline, with South Africa’s Standard Bank, the Industrial and Commercial Bank of China and Japan’s Sumitomo Mitsui Bank acting as lead arrangers for the project
loans. People familiar with the project say the participating banks are asking for higher interest rates, which has helped raise the cost of the pipeline to $5 billion from $3.5 billion.

Despite this and other recent investments, money flowing into energy projects in Africa remains about half of what it was a decade ago. The World Bank and several Western development banks say they have stopped funding new projects that lead to more oil
and gas being produced. Now some commercial lenders are becoming more careful about the public-relations fallout of financing projects that have been deemed harmful to the environment.

Some officials in poorer countries say such restrictions exacerbate global inequities, by allowing countries that already have the necessary infrastructure to profit from their fossil-fuel reserves, while potential newcomers are locked out. Uganda, like
other African countries, saw protests over record-high fuel prices last year, while Tanzania’s government introduced a costly fuel subsidy to cushion the hit on households and businesses.

“The energy transition shouldn’t be looked at globally where we are all lumped together,” said Irene Batebe, permanent secretary at Uganda’s energy and minerals ministry. “When you look at our pollution levels, you cannot say Uganda has
overpolluted.”

A TotalEnergies spokeswoman has said the company designed operations in Uganda to minimize their environmental impact and keep emissions per barrel below its global average, including by not burning off gas at extraction sites, using underground pipes
and squeezing wells within each other to reduce their footprint inside the park. The spokeswoman said some 60% of the people that will be displaced by the project have already been resettled in new houses with running water and electricity, while the
rest either received compensation or await homes still under construction.

Cnooc didn’t respond to requests for comment.

In the region around Murchison Falls, one of the country’s poorest, opinions are divided on whether the oil wells and pipeline will improve their lives.

Ezekriel Ongen, a farmer in the village of Kisomero, said compensation he received five years ago for 2 acres of land and money he now makes selling cassava, cabbages and tomatoes to workers on the TotalEnergies’ facilities has allowed him to send two
of his six children to university.

“My life has completely changed,” said Mr. Ongen. “I have even been able to buy more land to expand my farm.”

In Buliisa, a once-sleepy town of around 50,000 residents squeezed between the nature reserve and the shores of Lake Albert, new streetlights line freshly tarmacked roads. It has seen an influx of migrants from other parts of Uganda looking for jobs.

But some locals say new houses built by TotalEnergies are far away from workplaces and schools.

“I spend most of the money on transport,” said Fred Bamuturaki, who scratches out a living by fishing in Lake Albert, and says his new, three-bedroom house is more than 6 kilometers (3.7 miles) from the lake’s shores. “This is no good.”

https://www.wsj.com/articles/uganda-other-african-nations-push-for-fossil-fuel-projects-7dbcd006

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