Uganda Oil Debate

So she said...

For some reason, I was taking a critical look at the quality of Uganda (and Kenya) oil and this time I didn’t let my dislike for Kagu cloud my head. Tested samples of Ug oil is actually described as  sweet and waxy. Now the quality of crude (and therefore it’s commercialblity is) is graded as follows:
1) How vicious is the product (ability to flow with heating)?
2) What is gravity (density) of the product. (Density compared to water)?
3) What is sulphur content of the product. (Sour or sweet)- One of the needs of refining is to get of sulphur form finished product, since sulphur is very bad to engines and to humans.
Now UG’s oil ranks well on the sulphur spec. It’s crude is considered SWEET. It avg sulphur ranges btwn 0.1% to 0.2%. Industry standard is anything above 0.5% is considered high sulphur.  That implies sulphur levels in Ugandan crude are some of the lowest in the world, the simple meaning (which is govt position) is that a refinery processing Ugandan crude would have the advantage of requiring less investment in desulpherisation units, making the refinery potentially more profitable- (Although I would regard that too simplistic an analysis and conclusion!)
On the other two specs API (density) and Viscosity, UG’s crude wouldn’t be ranked among the world’s best. UG/Kenya crude API ranges between 24-33 deg. Anything above 30 deg is considered HEAVY.  On the viscosity, UG’s oil is heavily viscous (HEAVY & WAXY). It basically doesn’t flow at room temperature and must be kept at temperatures not less than 60˚C to maintain flowing and prevent wax deposition in pipelines. For it to be pourable, it must be kept at least at 40˚C.- (This again is the argument of the govt against building a pipeline for export- that it will be expensive)- Again I say this a simplistic way of looking at it.   
So, my take is this:

1.       Govt has a valid a point to consider refinery built

2.       Oil companies have valid point to export (this basis refinery economics viability vs exports economics- this I will discuss in detail another time)

3.       My main concern in this is that UG reserves are quite limited 3.5m bbls. These could run out in 25-35 years (like what happened to Dubai). So if not well managed, our children, grandchildren will never see benefit of this oil before it runs out. Dubai run out of oil, as they had limited reserves (maybe close to +4mbbls) but they had the foresight to use oil revenues to guaranteed in flows after oil had run out.

So he said...
I have always been of the view that the person who is important is the person closest to me. I have thus always been narrow minded in my view of potential benefits. The fact is the world will never be fair and we shall not find ourselves all happy and singing kumbaya until we reach heaven.

I will use Nigeria as an example because it is well known that those guys have severely misused their oil wealth. Nigeria is not Uganda by any stretch of the imagination. They have one of the biggest economies in Africa. Their infrastructure and cities are far better than what we have in East Africa. As such I would very much like for Uganda to have more of what Nigeria has. My needs are simple. All I want is a good road to my house and electricity most of the time. Considering my current income level in Uganda, which I think is middle class, there is every likelihood (unless God forsakes me in a big way) that I will continue to remain in the middle class. Remember I said my needs are simple, as such being rich is a nice to have, but not essential to my life.

There is absolutely no amount of thuggery that can take place that will prevent me from being better off because of the oil, IF it starts flowing in my time. I cannot speak for my kids and it will be up to them to sort themselves. I leave other people to worry about ending poverty in Uganda. I will concentrate on avoiding poverty of Magero.