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Earth Finds

Impacts Of Oil Activities On Land In Albertine Graben

By Mumbere Edwin Fanta

Uganda discovered commercially viable oil deposits in the Albertine Graben region in 2006 and has since embarked on establishing effective management procedures to promote growth and development for the country.

In light of these potentially transformative discoveries, Oil activities will certainly lead to social, cultural, economic and environmental changes for the communities and the country at large.

However Uganda faces a several challenges and these include women displaced from their land with inadequate compensation, oil pollution, limited access to Lake Albert since its waters will be used in the production of the oil, contamination of community waterways among others.

The access to land challenges, population growth and health consideration, food security, employment trends and the environment have not been left out in this thought.

Oil exploration activities such as digging of seismic wells and drillings have already led to serious changes in land ownership, conflict and displacement as well as an arrival of migrants struggling for opportunities in the Albertin Graben.

Not only is this growing migration likely to trigger population growth , increase land pressure and escalate competition among the indigenous people and newcomers  and it is likely to place more demand on the already limited social services of education, health and water in the region.

The large movement of people has implications for fiscal expenditure and allocation as well making it critical to capture land issues, demographics and changes in social infrastructure aspects such as roads and telecommunications.

However there is a precedent of increased health and other social problems connected to oil related activities, for example studies from Nigeria and Ecuador documents increased health risk to communities as result of pollution from oil population and also health risks with transfer of disease by migration population to their new communities.

However, the government through its community officers at both town council and district level have not prepared the community for these challenges and has not only watched the citizens suffer but has also participated in the land grabbing syndicate.

Mumbere Edwin Fanta

Africa Institute for Energy Governance- Kasese Office.

Reshaping Of Oil Markets Has Only Started

By Abdulnasser Alshaali

Oil prices are more volatile than they have ever been in the past 10 years, with a lot of uncertainty rising on what direction those prices will take in the future. As a result, it’s becoming ever more difficult for countries and businesses to assess projects and decide their feasibility in the near term.

It also makes it hard for countries, as well as individuals, to budget for hikes in oil prices, and to better utilise lower oil prices to remove subsidies or to support businesses.

With shifting geopolitics, supply-demand mismatch, and new entrants, volatility and uncertainty in the oil market are here to stay. Looking back at trends over the past 50 years, there were very specific major shocks to the oil market, like the 1973 embargo, leading to a sharp increase and an eventual drop to a price at which supply balanced out demand.

Similarly, uncertain supply with higher Asian demand increased oil prices post the year 2001, resulting in a pre-2008 peak and another in 2011. But this is no longer the case.

What has changed is that shifts in prices are more extreme and take place over shorter periods of time instead of taking years to flatten out.

Geopolitics and uncertain supply cannot be separated from one another. And despite the widely circulated rhetoric that countries like the US may be a major player in the oil market one day, such predictions fail to account for two points.

One, shale oil, which is what’s bringing the US to self-sufficiency in oil post-2021, requires different refining, with many oil refineries around the globe being accustomed to the type of oil that they have been importing for years. This means that we are far from witnessing dramatic changes in terms of suppliers.

Additionally, with countries having to cut down their production due to sanctions and others doing so because of turmoil, it is only expected that tightness in supply will grow further, with unfettered demand.

This brings me to the second point, which is that demand for oil is expected to outgrow supply in the long-term. Though this is yet to be observed and confirmed, a reversal in oil prices in the past five years is one indication of the same, but not one that can be taken for granted.

Such demand — if moderated by energy supplies from other sources, including biofuels and renewables — could be significantly lower than anticipated. The result would be a more balanced market with less volatility in oil prices than what we are observing today.

Furthermore, new oil production in various regions is coming online, such as Uganda in Africa and Guyana in South America. Russia, along with countries in the European Union (EU), possess significant shale oil reserves. However, France and Bulgaria, both EU countries, have banned the process of extracting shale oil, known as fracking, due to its negative environmental impact.

Though it is hard to ascertain where oil prices are headed, there are certain events taking place today and likely going to shape the oil market of tomorrow.

Firstly, countries that are able to tap into their oil resources will be able to move closer to self-sufficiency, and so will their nearby regions. As that takes shape, dynamics in the oil market will no longer be determined by straight forward demand and supply, but rather how much energy does a region require as part of its total mix of all energy sources.

Therefore, today’s players in the oil market will not necessarily be tomorrow’s players. In fact, this can be only assessed and forecast by taking into account potential and progress in oil producing regions to determine excess supply, and hence exports.

Tomorrow’s players in the oil markets will be regions with the highest exporting capacity, not countries.

Secondly, traditional oil producers and exporters are now moving up the supply value chain to safeguard against future unpredictability, with mergers taking place to consolidate operations and streamline investments.

Mubadala Investment Company in the UAE, established through the merger of Mubadala Development Company and International Petroleum Investment Company, is one example. Another is the merger of Oman Oil Co and Oman Oil Refineries and Petroleum Industries Co.

Thirdly, oil prices have been pushed to the extreme by speculation, not by a sudden surge in demand or a sudden drop in supply. When oil prices started dropping post-2014, oil supplies were stored on ships, oil tankers, rather than admitted into the oil market.

While one reason was to keep excess supply off the market and hence upward pressure on oil prices, the other was for investors and speculators hoarding oil barrels to sell them at a price that seemed destined to continue rising. This also enabled them to honour their options contracts in an oil market where prices were increasing unabated.

One general observation in the commodities’ market is that prices stay on a mild upward trajectory in the long-term, even if there were steep pitfalls along the way. But if and only if there were no major changes in the supply-demand dynamics.

Therefore, and with an overall growing demand for oil, and its by-products, it is only expected for the price of oil, taken on average every decade or two, to be higher than in preceding ones.

However, such a growing demand will not be necessarily supplied from today’s traditional players, with growing self-sufficiency from domestic and regional resources, inclusive of other sources of energy that, in net, would reduce dependence on oil.

How oil prices will be impacted is anyone’s guess.

The last thought that I want to leave you with: what about the markets for gas and Liquefied Natural Gas (LNG)?

Abdulnasser Alshaali is a UAE based economist.

 

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Dangote, Imouhkuede Launch Africa Business Coalition For Health

An ambitious platform designed to bring together business leaders in Africa to collaborate with heads of government and other stakeholders to tackle basic health challenges in Africa has been launched in Addis Ababa, Ethiopia with assurances from government to collaborate for a healthier Africans.

The platform, African Business Coalition for Health (ABC Health) was launched with commitments by all partners and stakeholders to put efforts together to improve basic health care services in the continent during the inaugural Africa Business: Health Forum 2019, which witnessed the launch of the official logo of the ABC Health.

The ABC Health is a joint initiative of Aliko Dangote Foundation; GBCHealth, and United Nations Economic Commission for Africa (UNECA), with the objective of driving business leadership, strengthening partnerships, and facilitating investments to change the face of healthcare in Africa.

Taking place on the margins of the 32nd African Union Summit Heads of Governments and Business Community leaders across Africa, the forum  examined opportunities to accelerate economic development and growth of the continent through a healthcare reform agenda that focuses on the wellbeing of employees for a more active and productive workforce.

The forum is expected to unify Africa's key decision makers in exploring opportunities for catalysing growth in the continent's economy, through business partnerships to invest in the health sector.

In his opening remarks, the Chairman of Aliko Dangote Foundation, Alhaji Aliko Dangote, who was represented by the Foundation's Executive Director, Halima Aliko-Dangote said Africa Business Health Forum would identify issues and solutions to Africa's health challenges with a view to mobilizing the will to confront it headlong.

He said it is a well-known fact that there is a vital relationship between health and economic growth and development in Africa as healthy populations live longer, are more productive, and save more. Access to essential health services is an important aspect of development.

Dangote stated that "Governments from both developed and developing countries are increasingly looking at public-private partnerships (PPPs) as a way to expand access to higher-quality health services by leveraging capital, managerial capacity, and know-how from the private sector."

According to him, "Africa's healthcare systems demand significant investments to meet the needs of their growing populations, changing patterns of diseases and the internationally-agreed development goals.

He said as a businessman, and through Aliko Dangote foundation, he is committed to working with governments and key stakeholders for the development of impactful health initiatives in Africa in the belief that private sector leaders have a strong role to play.

Back in his home country, Dangote informed his audience that in keeping with his passion to see a healthier African people and better continent he has proposed and charged business leaders to commit at least one percent of their profit after tax to support the health sector.

In his own remark, the Co-Chair of the GBCHealth, Aigboje Aig-Imoukhuede, said while Africa has made significant progress in the funding of healthcare, "we are still very far from where we need to be to achieve SDG Goal 3,"

He lamented that the healthcare in Africa is constrained by scarce public funding and limited donor support, and that the out of pocket expenditure accounts for 36% of Africa's total healthcare spend pointing out that given the income levels in Africa, it is no surprise that healthcare spend in Africa is grossly inadequate to meet Africa's needs leading to a financing gap of N66bn per annum.

Mr Imhokuede said it was clear that African government alone cannot solve this challenge, which is further exacerbated by our growing population and Africa's changing disease portfolio. Therefore there is no alternative but to turn to the private sector to complement government funding.

Said he "Our continent accounts for less than 2% of global health even though our very fertile people account for 16% of global population and carry 26% of the global disease burden. By 2050 Africans will account for more than 50% of global population growth much of that coming from my country Nigeria, a great opportunity and at the same time a ticking time bomb should we fail our health systems quickly.

"That is why we have gathered here in Addis Ababa today to see how together we can fix health in Africa. The private sector and the public sector working together as partners have the potential to change Africa's healthcare from doom and gloom to progress and results. Africa's private sector has great capacity to be relevant partners.

"The private sector must be encouraged to optimize and step up its involvement and contribution to health funding in Africa. We have seen what global private sector players accomplished in the fight against the AIDS epidemic through powerful coalitions such as GBCHealth. This is an indication of the power of consolidated effort which Africa's growing private sector can bring to solving our health challenges."    

"African leaders now have a stronger sense of urgency to combat the lack of quality health care that Africans endure. The inequality of healthcare available to Africans compared to people in other parts of the globe is vast and unacceptably pervasive. With the cooperation of both the public and private sectors, there is a huge potential to boost health outcomes with significant financial gains," said Aigboje Aig-Imoukhuede, Co-Chair GBCHealth.

The Executive Secretary of the United Nation Economic Commission for Africa (UNECA), Vera Songwe regretted that that Africa with over 50 countries is struggling to combat her healthcare challenges but that organizations such as being launch offer a veritable perspective from the private sector to the solutions to Africa's health care problems.

She said about $17.3 worth of drugs are imported into African Continent and that if Africa can manufacture those drugs, then that would be 17.3 billion worth of jobs created.

However, to attract the participation of African private sector, there is the need to create enabling environment. "To the private sector, our leaders are expecting you to invest in healthcare because you will get higher returns than you can get anywhere else."

According to her, a healthier Africa would be a happy Africa and a happy Africa will be a productive Africa.

One after another, the three African heads of governments, namely President of Republic of Djibouti, Omar Gilles; the Ethiopian Prime Minister, Abiy Ahmed; and Botswana President Mokgweetsi Masisi took turn to explain what their administrations have been doing to improve health care delivery services in their respective countries.

They also gave lack of adequate funding as part of the problems militating aainst achieving their administrations' plan to provide sound health care services just as other African countries.

They all endorsed the establishment of Africa Business Coalition for Health and concluded that it would provide opportunities to accelerate economic development and growth of the continent through a healthcare reform agenda that focuses on the wellbeing of employees for a more active and productive workforce.

Tullow Oil Strikes First Post-Tax Profit In Five Years

Africa-focused exploration company Tullow Oil has today posted its first annual post-tax profit in five years. It said it would resume dividends with a 4.8% share payout as it sets its sights on East African projects and drilling in Guyana. 

As flagged in November, Tullow will pay out at least $100m to shareholders from this year while aiming to shrink its $3.1 billion debt pile and ramp up spending to $570m at the same time. 

The largest chunk of that money will help boost output in Ghana which in turn sets Tullow on course to raise output to 102,000 barrels of oil equivalent per day (boed) this year from 90,000 boed. 

Tullow made a post-tax profit of $85m on $1.9 billion in revenue last year buoyed by higher oil prices and cost discipline. 

A $208m payment after selling a stake in its Uganda onshore fields to Total was delayed last year because the country asked for more tax on the deal than expected. 

Tullow today said it had now agreed on the principles of the tax arrangement.

It also plans to give the final go-ahead on its Ugandan project in mid-year and Kenya by year-end. 

Milestones to pass first include financing arrangements for two pipelines planned to carry oil from the onshore fields to the Indian Ocean coast.

In Uganda, Tullow anticipates finalising commercial and land agreements in the first half. 

In Kenya, the company said it expects commercial framework agreements from the government and deals over land acquisition for the 800 km pipeline in the first quarter. 

In Guyana, Tullow plans to drill the Jethro prospect in the second quarter as the first of two planned wells on the Orinduik block. 

 

It hedged just under 60,000 bopd for 2019 at a floor price of $56.24 per barrel and 25,000 bopd of its 2020 production $59 a barrel.

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