Fight over Total’s $4b oil works inside Murchison park

TotaEnergies EP operates the Tilenga development project that straddles the districts of Nwoya (inside the park) and Buliisa, south of the River Nile. The cost of developing the Tilenga project encompassing 400 oil wells is in the range of $4b (Shs15 trillion). The resplendent Murchison Falls National Park, to the northwest, together with the Bugungu and Karuma Wildlife Reserves, form the Murchison Falls Conservation Area covering an expanse of 3, 893 square kilometres.

The conservation area is home to some 144 mammal species, 566 bird species, 51 reptiles, 28 amphibians, and more than 758 known plant species, according to a 2015 survey by the Wildlife Conservation Society, several of which are globally and regionally threatened species.

Murchison Falls National Park is the largest and the second-most visited national park in the country.

According to the earlier approved Field Development Plans (FDP) and Environment Social Impact Assessment (ESIA), TotalEnergies EP Uganda was permitted to deploy one oil drilling rig at the Jobi-Rii Five (JBR 5) well pad, nestled inside the wild savannah plains.

A well pad is a site of facilities and other infrastructure for oil and gas drilling.  Sixteen—production and injection—oil wells will be looped on the JBR5 well pad using a network of buried conductor pipes drilled together, and the area restored being feed grounds for the animals.

With the progress of activities following the announcement of the Final Investment Decision (FID) in April 2022, and the government eager to see commercial oil production start towards the end of next year, industry sources told Daily Monitor that TotalEnergies EP put the spanner in the works seeking to mount a second oil rig in the park ostensibly to fast track oil drilling.

Both PAU and TotalEnergies EP declined to comment on the matter when contacted more than a week ago to avoid being seen as on opposite sides, which could give anti-fossil fuel campaigners ammunition.

However, the Ministry of Energy Permanent Secretary, Ms Irene Bateebe, told this newspaper that consultations are ongoing on the “government’s position”.

Industry sources revealed that inside the Murchison Falls National Park lies what petroleum engineers call “sweet spots”—shallow wells that allow cost-effective drilling.

By contrast, TotalEnergies EP’s other oil fields such as Ngiri, Gunya, Kigogole, Nsoga, and Kasamene, south of Lake Albert, are categorised as “deep wells” requiring deep hole drilling, with high costs involved.

The JR05 is one of the 10 well pads planned inside the park, out of the 34 well pad locations under Tilenga. The earlier plan was the sequenced deployment of one rig at each of the well pads inside the park.

High-stakes considerations

The months-long tightrope pulling over the second rig inside the park, sources further told this newspaper, puts the government, and particularly President Museveni—who has the final say on the matter—at a “critical juncture”—of choosing between the two economic activities: oil or environment. A gain for one economic activity is a loss for another.

The matter, sources indicated, was the thrust of the April 22 meeting between President Museveni and the TotalEnergies SE president for exploration and production, Mr Nicolas Terraz at State House, Entebbe. TotalEnergies SE is the parent company of TotalEnergies EP Uganda B.V.

Mr Terraz was accompanied to the meeting by the TotalEnergies Senior Vice President-Africa, Mr Mike Sangster, the TotalEnergies EP Uganda General Manager, Mr Philippe Groueix and his deputy, Ms Mariam Nampeera.

The government side included Energy Minister Ruth Nankabirwa, Permanent Secretary Bateebe, Finance Minister Matia Kasaija, PAU Executive Director Ernest Rubondo, Uganda National Oil Company (Unoc) Chief Executive Officer Proscovia Nabbanja, and the Petroleum Directorate Director Honey Malinga. The East African Crude Oil Pipeline (Eacop) Managing Director, Mr Martin Tiffen, also attended.

TotalEnergies EP said in a post on X that Mr Terraz, who toured the Tilenga development project, briefed President Museveni “on the developments” of the oil project.

“I visited the sites at Tilenga and the pipeline. The drilling and pipeline activities are going on very well,” Mr Terraz, was quoted separately in a statement by the Presidential Press Unit (PPU).

However, regarding the company’s proposed amendment of drilling activities inside the Murchison Falls National Park, sources revealed, President Museveni directed TotalEnergiess officials to go back and harmonise their position with technocrats in PAU and the Ministry of Energy.

A few days to this meeting, sources intimated, the President had summoned top PAU and Ministry of Energy technocrats at State House, Entebbe, for a preparatory briefing during which he talked about what was at stake.

Twelve days after the April 22 meeting, the TotalEnergies EP General Manager, Mr Groueix wrote to the PAU Executive Director, Mr Rubondo requesting for a “no-objection” to transfer the second rig from the Gunya-4 (GNO4) well pad, from Buliisa District, for operation inside the park.

PAU and TotalEnergies EP, according to correspondences, had previously exchanged intensely after the company sought to move the oil rig from the Gunya-1 (GN01) well pad to GN04, which is under construction.

Although the move went against the approved schedule, PAU acquiesced to save the company accruing “standby costs” pending revising its drilling schedule. Both GN01 and GN04 are located in Buliisa.

Construction works at GN04, according to PAU, are at 80 percent. TotalEnergies EP, then put the spanner in works to transfer the rig from GN04 to Jobi-Rii 02 (JBO2), where civil works are said to be at 58 percent, which according to PAU reeked of sinister motives.

In response to Mr Groueix on May 3, Mr Rubondo wrote:  “It is clear, therefore, that the aspects presented in your letter regarding the non-readiness to drill at Gunya-04 (GNA04) well pad are as a result of TotalEnergies EP Uganda’s deliberate effort to increase drilling footprint in the national park, contrary to the approved Field Development Plan and Environment Social Impact Assessment. This is in contravention of Section 85 of the Petroleum (Exploration, Development, and Production) Act, 2013 and provisions of the National Environment Management Act, 2019, respectively.”

In a tricky bind

Section 85 of the Petroleum (Exploration, Development, and Production) Act (1) details that, a licensee (oil company) shall inform the minister of any significant deviation or alteration of the terms and preconditions on which a field development plan has been submitted or approved and any significant alteration of facilities or use of facilities.

Sub-section two stipulates that the minister (of Energy) may, on receipt of information under sub-section (1), and on the recommendation of PAU, approve the deviation or alteration of the terms and preconditions on which a plan has been submitted or approved and any significant alteration of facilities, or may require a new or amended plan to be submitted for approval.

Mr Rubondo, further detailed: “The efforts to increase the drilling footprint, and to vary the Construction Execution Plan by TotalEnergies have been undertaken against the consistent advice by PAU over the last one year.”

“It is important that this unfortunate situation which the project is beginning to face, as a result of non-adherence to the agreed frameworks is addressed quickly, and in a manner that enables efficient and sustainable implementation of the Tilenga project,” Mr Rubondo, wrote, the letter copied to both Ms Nankabirwa and Ms Bateebe.

He nonetheless declined to approve TotalEnergies EP’s movement of the rig north of the River Nile and further directed that the rig remains at GNO4.

“It is also important that this matter is handled in a manner that builds the confidence and trust required for the successful and timely implementation of the Tilenga project. Some of the actions undertaken to date do not seem to be taking adequate consideration of this important aspect,” the letter reads in part.

Following PAU’s rejection of the request, sources revealed that TotalEnergies EP embarked on lobbying the top officials at the Ministry of Energy to rein in PAU.

 Technocrats, speaking on condition of anonymity to speak freely owing to the sensitivity of the matter, intimated to Daily Monitor that “any forced” greenlighting of TotalEnergies’ could potentially undermine PAU’s tenacity to regulate, international oil companies and their subcontractors.

“They will be allowed in the national park, turn it upside down, and pack their bags and leave at some point. It is Uganda and Ugandans that will have to deal with the consequences,” one official intimated.

Another official, however, said they are “carefully” studying TotalEnergies’s proposal from a holistic angle.

“True there are major environmental concerns, but there are cost-related aspects if we want to get to first oil as soon as possible. The company could be allowed to channel its efforts to work in the park, and later move outside,” the official said.

Droves of tourists from near and far come to the Murchison Falls National Park to glimpse the idyllic breathtaking scenery as the sunrise or sunset toe-pokes the earth. It is also inside the park that the mighty River Nile gushes into Lake Albert en route to the sand-coloured landscape in Egypt to the Mediterranean Sea.

A proposal in 2019, by the Electricity Regulatory Authority (ERA) backed by some tenderpreneurs, to construct a 360megawatts hydro-electric dam at Uhuru falls, adjacent to the Murchison falls, elicited widespread criticism, on the backdrop of TotalEnergies’ cutting, digging, and excavation of the Savannah plains means inside the park.

Conservation plan in question

Critics opposed to oil activities in the park have long drawn grim parallels to the beleaguered Niger Delta, arguing that adverse interruption to the eco-system—flora and fauna, will deal a blow to the tourism sector, Uganda’s highest foreign exchange earner of $1.6b (Shs5.6trillion) between 2018 and 2019 before Covid-19.

In its voluminous six-part- ESIA report submitted in 2018, TotalEnergies EP detailed that it is committed to developing the Tilenga project in conformity with the International Finance Corporation (IFC) performance standards.

The latest manoeuvres by the company to widen its footprint inside the park come against the backdrop of discussions about the best conservation plan for the national park during and after oil activities.

 The protracted discussions revolve around two strategies; biodiversity net gain, and biodiversity offsetting.

The latter is a broader mitigation plan of action for achieving “no net loss”—according to the Washington DC-based NGO, Forest Trends, where the goal for a development activity in which the impacts on biodiversity it causes are balanced or outweighed by measures taken to avoid and minimise the impacts, to restore affected areas and finally to offset the residual impacts.

The notable biodiversity offset in the country is the Kalagala offset that covers Kalagala and Itanda Nile Bank and Namavundu central forest reserves, 40 kilometres north of Bujagali. The area was created to offset the large-scale flooding into people’s homes and destroyed property as a result of the construction of the Bujagali dam.

Consequently, the World Bank—which backed the dam— and the government signed an indemnity agreement for mitigating damages caused by the dam and categorically stated that the area set aside would not be flooded by another hydro dam project. Except, it didn’t take long when the offset was impacted by the construction of the 185MW Isimba dam upstream triggering a boardroom war of words.

As such, in the case of the Murchison Falls National Park, TotalEnergies EP and the government would evaluate the extent of damage on land, flora and fauna, by the oil infrastructure, and gazette an area adjacent or elsewhere equivalent to what was affected for conservation purposes.

On the other hand, biodiversity net gain supposes the goal of achieving a greater diversity of flora and fauna after a development activity has taken place than was present before. This is measured and there are known tools such as the natural biodiversity metric to assess the ‘biodiversity unit’ value of a site.

Inside sources told Daily Monitor that TotalEnergies is bent on a biodiversity net gain approach, ostensibly for cost-cutting reasons, while PAU and other regulatory bodies insist on both. The protracted discussions are said to be ongoing.

While the ultimate goal of net loss is aimed at boosting pressure between development and conservation by enabling economic gains to be achieved without attendant biodiversity losses, several studies indicate that biodiversity offsets represent a necessary component of a much broader mitigation strategy.

In June 2022, TotalEnergies Uganda, which in early 2021 changed the name from Total to TotalEnergies to capture the imagination of energy transition enthusiasts, launched an ambitious biodiversity programme, an initiative for protecting and conserving biodiversity in and around Murchison Falls National Park.

The order of hierarchy, TotalEnergies EP officials emphasised, is environment, wildlife, tourism, and the oil project, which is now under sharp focus.

Cost

Cost of development for the Tilenga development project: $4b (Shs37 trillion).

The project will produce about 230,000-barrels of oil per day to be fed to the East African Crude Oil Pipeline (Eacop).