Tullow Oil given licence to flare Ugandan gas
Tullow Oil contract under attack from NGO observers. Flaring could release huge volumes of greenhouse gases
Terry Macalister | The Guardian | 16 February 2010
Shell flares gas near Warri, in the Niger delta. Shell's gas flaring in the country is regarded as the biggest source of carbon emissions in sub-Saharan Africa. Photograph: George Osodi/AP
Tullow Oil, the London-based oil operator, has signed contracts with the Ugandan government allowing it to flare gas with the potential to release huge volumes of greenhouse gases into the atmosphere, according to a report by non-governmental organisations.
The production-sharing agreement also appears to carry few specific safeguards in the event of spills or other environmental damage and is too financially weighted in favour of Tullow, says the study by the UK-based NGO Platform, which is working in Uganda with the Civil Society Coalition on Oil.
The report comes amid intense speculation that Tullow is poised to sell on some of its interests in the new oil province around Lake Albert to more powerful oil groups such as Total of France or Chinese state-owned group CNOOC.
In its report, Cursed Contracts: Uganda's Oil Agreements Put Profit Before People, Platform says: "Urgent changes should be made to the contracts, legislation and regulatory regime covering oil to achieve a measure of environmental protection, to minimise economic distortion through revenue flows and to capture a more appropriate share of the revenues.
"Uganda is heading towards oil production in 2010/11 with no oil legislation in place, no revenue management system and is locked into contracts that undermine the country's sovereign control over its own natural resource"
The critics accept that Tullow has made clear its commitment to "good international and industry practice," but say such words are meaningless when there is no agreed standard or contractual enforcement mechanism in a host country.
The issue of flaring is spelled out in article 19.3 of the production sharing agreement, kept secret by the government until it was revealed by NGOs worried that it was unduly weighted in favour of the oil industry.
The agreement says: "Associated gas which is not used in petroleum operations … may be flared with the consent of the government, which consent shall not be unreasonably withheld or delayed."
The flaring of gas in Nigeria is regarded as the biggest source of CO2 emissions in sub-Saharan Africa. Shell has repeatedly failed to follow through on promises to put an end to flaring, despite court orders demanding it stop.
The report criticises the financial arrangements between the Ugandan government and Tullow, saying the oil company stands to make a financial return of up to 35%, a "very high profit level for the oil industry, even for risky projects".
Tullow said it could not comment directly on the agreement because it had to abide by the Ugandan government's wishes that it be kept confidential. However, a company statement noted: "Tullow's agreements are in line with production sharing agreements signed all over the world."
Oil industry supporters said Tullow had taken a significant risk by investing $600m (£383m) on exploration in Uganda and had potentially put the country on the map as a serious oil producer.
They argued Tullow deserved to make a decent financial return and claimed Platform was a small NGO that had shown a long-standing opposition to oil companies wherever they operated.
Posts
No comments:
Post a Comment