The Independent Uganda: You get the Truth we Pay the Price
Big fight coming
Analysts anticipate a tough tussle between Museveni and Pouyanne; the Total CEO whose personal and professional lifestyle are marked by bold deal making. The 56-year old Patrick Pouyanne is known to be very smart and his negotiation style has been described as “hard charging”.
According to Anne-Marie Idrac, a former trade minister who’s been on Total’s board since 2012, Pouyanne is a good deal-maker because he “thinks quicker than most people,” and is “a lot more straightforward than other French bosses”.
Pouyanne is known to have an “eruptive temper” and with his imposing size, he can be intimidating.
“A lot of people fear him” and working with Pouyanne can be stressful, said Thierry Defresne, the representative of the CGT union in Total’s refining division, according to one report.
Pouyanne has publicly mocked a French junior minister who opposed his plans, and publicly squabble with other oil sector CEOs over strategy. Unlike most Western executives, he refused to boycott a business conference in Saudi Arabia in the wake of the murder of journalist Jamal Khashoggi.
He shares some traits with Museveni, including a tendency to micromanage. Pouyanne is described as a “strategist and a perfectionist” who wants to be involved in everything that matters for the company. Like Museveni, Pouyanne keeps an unusually tight rein over his deals. According to one report, Pouyanne sometimes does work that should be done by his in-house experts himself.
“You have to be quick and to be discrete,” Pouyanne once reportedly told a journalist.
Quite significantly, Pouyanne understands how frustratingly slow government decision-making can be. In the 1990s he worked in the Ministry of Industry and the office of the prime minister. He quit in 1997 to join the private sector — because in the private sector “you can take actions, you are judged on results.”
He also understands Africa, having worked in Angola and has visited Rwanda to see the gorillas.
In February, Pouyanne told journalists in Paris that getting FID would be his priority in 2019. At the time however, he had significantly quipped that the project has “too many crocodiles that need to be tamed”.
A story by the Reuters news agency that reported the incident said Pouyanne was alluding to various difficulties in getting the Uganda project off the ground; including logistics of a landlocked country, lack of experience in a new country to oil, and challenges of create everything from scratch.
But by April when the CEOs of Total and Tullow had one of their several meetings with Museveni, it had become clear that getting the FID going would not be easy because of disagreement s over tax issues.
As The Independent reported earlier in our story “Museveni locks out oil investors: It’s Total disaster”, the oil firms wanted Museveni to direct the Uganda Revenue Authority (URA) on how to handle the tax dispute in their favour. But when they gave him a take it or leave it ultimatum to freeze activities in Uganda, Museveni reportedly ended the meeting prematurely. Museveni cancelled another meeting that had beebn scheduled for June 05.
From that point, the FID appeared basically dead unless the JVPs paid the taxes. The JVPs let Sale and Purchase Agreements (SPAs) they had signed to expire on August 29 without a deal. Under the SPAs signed on January 9, 2017, Total and CNOOC were to acquire of 21.57% or out of Tullow’s 33.33% interest in the Lake Albert licenses.
At the time, it was thought that the expiry of the SPAs would delay but not freeze the oil development. After all Uganda first announced impending oil production in 2011 but has kept pushing the deadline for eight years.
Panmure Gordon analyst Colin Smith summed up the thinking when he advised investors that “given the national importance of the project we expect a resolution will be found and that the most likely outcome is that the previous deal or something similar with the existing partners will be concluded”. But then Total on Sept.05 ratcheted up things by announcing that it was suspending all activities, including tenders, on the East Africa Crude Pipeline (EACOP). The JVPs immediately started major layoffs of staff.
Despite all that, Total’s exploration & production President, Arnaud Breuillac said in statement that Total together with its partners CNOOC and Tullow will continue to focus on progressing the development of the Lake Albert oil resources.
Said Breuillac: “The project is technically mature, and we are committed to continuing to work with the government of Uganda to address the key outstanding issues required to reach an investment decision. A stable and suitable legal and fiscal framework remains a critical requirement for investors.” In other words, it appears, Total wants Uganda’s oil but on Total’s terms. Museveni does not like that.
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Pouyanne an oil executive and expert in oil and Africa …
“He also understands Africa, having worked in Angola and has visited Rwanda to see the gorillas.”
Maybe this expert on Africa and oil would realise Uganda’s economy is independent of oil and Uganda would lose almost nothing if the oil remained in the ground as compared to Total that has sunk in costs that need quick recovery and the shareholders of total may start getting impatient and kick out an executive that is failing to deliver.
The article clearly spells out how some salient investments in Uganda are contingent on oil production. As well, BOU considers Uganda’s debt to be sustainably managed only if the 2023 oil production land mark is achieved. These r clear examples that Uganda’s economy is dependent on oil. Besides, our debt is ever increasing. Soon we shall hit the 50% debt to GDP ratio.
What these IOCs have invested in Uganda, though huge, is very little given that the major investments pertaining development of the fields haven’t commenced. The move to suspended operations works more for them and not Uganda whose focus is on short term gains.
I hope the Government of Uganda realises sooner than latter before it makes a worthy decision.
Uganda’s population of 40million plus who need shelter, food, clothing, banking, security is a much greater resource than oil will ever be to Uganda’s economy…. So its hubris for Total and other oil companies to imagine Uganda’s economy will grind to halt for not exploiting a few billion barrels of oil
Lest you have forgetten for the past 100years of Uganda’s existence has depended on its rapidly expanding population and agricultural earnings from coffee, cotton etc building universities,hospitals, etc and this agriculture and a rapidly expanding population are still around and will likely be around in the next 100 years. The oil revenues if they ever come will supplement this economic foundation and the hullabaloo about oil this, oil that is uncalled for excitement.
So clearly Total needs Uganda more than Uganda needs Total. Maybe Total and these other oil companies should desist from making silly threats unless they are willing to use miltary force to extract this oil and are also willing to miltary guard against sabotage by Ugandan patriots of the oil pipeline from hoima to the coast this plus the cost of heated oilpipeline and you should realize the uganda’s oil becomes uneconomical so Tullow should just pay the tax and move on
Oil companies are minded by making profits, yet Uganda government is looking at the best and sufficient means on how its oil resiurces becomes profitable and benefit the entire country in terms of service delivery and financing infrastructure projects. Oil refinery and pipeline are both lucrative business investments which are supposed to be put in place, Uganda can flood oil supply on the african market globe. Know need to hurry up such agreements because might be costly on the uganda side unlikely oil companies.
Uganda is perhaps unlucky with geography as the $20Bn investment required here is to get the oil produced and transported to market is simply too big and far too risky.
So this dispute could not have come at a better time for the oil companies – much better to fall out now before you invest that $20Bn than afterwards.
They now have a last chance to step back and ask themselves were we actually stark raving mad to think of investing $20Bn in an oil project in Uganda in the first place?
The answer of course is absolutely yes!!
They will lose it all to corruption or expropriation, every single cent!
So as a shareholder I am hoping this will not be resolved as I want them to reverse out of this investment altogether while there is still time as Uganda will destroy these companies.
The ordinary Ugandan citizen would not have benefited anyway, the big men would have taken it all.
Oil is a finite resource and it’s discovery is diminishing, almost reaching peak discovery. With that is mind Uganda have an upper hand in dictating rent on its resource knowing that sooner or later IOCs will come back begging for it. Moreover, geological uncertainty has been reduced, the other hurdles (or seemingly) are just a matter of attitude of the IOC which will change. No deal is better than a bad deal.
Kakuta sacrifice less now for more in the future. Think positive
Well Uganda needs Total (E&P) more than Total needs Uganda. Whether we argue from the debt analysis point of view or living standards etcetra. Uganda came to the world picture after the discovery of oil short of that it was only known as General Idi Amin’s country of Origin. This current impasse and show down without repeating contents of comments above only serves rather as a warming to total Investment decision desk to rethink their previous “go invest decsion” what comes to the risk analysis irrespective of sunk cost are three things going forward. Taxation, expropriation either in present regime or any change of government and security of tenure of the concessions granted. Just as governments communicate, corporations communicate too. So Uganda ends up a no investment zone in natural resources for majors and medium companies. So sacrifice now picture the future.
Uganda’s population of 40million plus who need shelter, food, clothing, banking, security is a much greater resource than oil will ever be to Uganda’s economy…. So its hubris for Total and other oil companies to imagine Uganda’s economy will grind to halt for not exploiting a few billion barrels of oil
Lest you have forgetten for the past 100years of Uganda’s existence has depended on its rapidly expanding population and agricultural earnings from coffee, cotton etc building universities,hospitals, etc and this agriculture and a rapidly expanding population are still around and will likely be around in the next 100 years. The oil revenues if they ever come will supplement this economic foundation and the hullabaloo about oil this, oil that is uncalled for excitement.
So clearly Total needs Uganda more than Uganda needs Total. Maybe Total and these other oil companies should desist from making silly threats unless they are willing to use miltary force to extract this oil and are also willing to miltary guard against sabotage by Ugandan patriots of the oil pipeline from hoima to the coast this plus the cost of heated oilpipeline and you should realize the uganda’s oil becomes uneconomical so Tullow should just pay the tax and move on
We know them. Colonizers and robbers of wealth. One day it’s fair trade this, fair trade that… the next it’s this kind of nonsense. They can take their dirty tricks and try them elsewhere.
In fact this may be another God-given chance for Ugandans to double check and cross check all the things we have been told by these companies about our oil and gas, this time while appreciating their true colours which they have now shown. They cannot be trusted AT ALL. Let any company that wishes to trick Ugandans know that we are not simple people.
Uganda stand firm here… these oil companies would never dare to evade tax in Europe.. but they are here evading tax in Africa.
Museveni won’t give a damn on those exploitation companies , uganda should stand firm .
The reason Africa has remained poor is because of our selfishiness. These companies are bringing in USD 20 billions and we are already frustrating them over USD 0.06 billion! We are already fighting even before half a billion dollars is invested. We should not stamp our feet over 6 billion of oil reserves. Mark you, Saudi Arabia has over 265 billion barrels of Oil reserves. We should not therefore think Uganda’s oil is too much to scare these companies. Comparing our oil reseves to those of Saudi Arabia, Iran, Venezuela makes it like a drop in the ocean.
With the evolution of electric cars, climate change the world moving away from fossil fuels. In 15 years, the value of oil will have depreciated significantly. The US is now pumping out its oil at record levels of more than 13 million barrels per day. The US plays a significant role in determining the price of oil. When it depletes its reserves, it will influence key decisions in combating climate change. Probably by then, Sanctions on Iran will also be removed and the oil price will come crushing.
Looking at a bigger picture, Uganda needs to start plans for production now. Look at the coal industry just 20 years ago, it was booming and the talk of the town. Where is it today? That should be an important lesson.
Mbu, “The reason Africa has remained poor is because of our selfishiness.”
…these are the ones who were just daydreaming during history lessons. *smh*
We should stand firm as a country and support these decisions made by our government