President Yoweri Museveni has explained why Uganda’s crude oil is classified as “sweet”, as the country moves closer to commercial oil production and its long-awaited entry into the international oil market.
Museveni made the remarks during a supervisory visit to Uganda’s oil facilities in the Albertine region, where he was briefed on the progress of the country’s oil production infrastructure.
The President said he had initially wondered why Uganda’s crude was being described as “sweet”, jokingly asking whether there was sugar in the petroleum.
“I asked my people, is there sugar in the petroleum? Why do you call it sweet?” Museveni said.
He said he was later informed by the Permanent Secretary at the Ministry of Energy Irene Pauline Batebe that the term “sweet” refers to crude oil with a low sulphur content.
In the petroleum industry, crude oil is generally classified as either sweet or sour depending on its sulphur content. Sweet crude contains relatively little sulphur and is generally easier and less costly to refine than crude with high sulphur levels.
Uganda’s crude is also known to be waxy, meaning it requires heating during transportation to keep it flowing through the pipeline.
Uganda has officially branded its crude as “Uganda’s Waxy Sweet Crude”, a designation intended to identify the country’s oil in the international market.
Museveni also used the occasion to caution against wasteful spending once oil revenues begin flowing.
He said the expected oil revenues should be invested in long-term infrastructure and productive assets rather than luxury consumption.
Museveni said Uganda should use the money to build power infrastructure, including hydroelectric power stations, expand the railway network and undertake other projects that would benefit future generations.
He said the country’s approach should be to use oil wealth to create “durable capacity” rather than spend the revenues on imported luxury goods.
The development comes as Uganda’s multi-billion-dollar oil project approaches the production stage, nearly two decades after commercially viable oil reserves were first confirmed in 2006.
The country is developing two major oil fields Tilenga in the Buliisa area and Kingfisher in Kikuube, alongside the 1,443-kilometre East African Crude Oil Pipeline (EACOP), which will transport crude from the oil fields in western Uganda to the Tanzanian port of Tanga for export.
Tilenga is expected to be the larger of the two projects, with peak production projected at about 190,000 barrels per day, while combined national peak production is expected to exceed 200,000 barrels per day.
The oil developments are being undertaken by joint venture partners including TotalEnergies and CNOOC Uganda, alongside the Ugandan Government and other partners.
With the central processing facilities, production infrastructure and EACOP advancing towards completion, Uganda is increasingly positioning itself to transition from an oil explorer to a crude oil-exporting country.
Uganda’s oil journey has taken nearly 20 years, having been slowed by regulatory processes, financing challenges, infrastructure requirements and environmental concerns.
The completion of the oil infrastructure is now expected to bring the country closer to its first commercial oil production, potentially marking one of the biggest changes in Uganda’s economy and export sector.
The journey will begin in the Albertine region, where crude from the Tilenga and Kingfisher oil fields will be produced and processed before entering the 1,443-kilometre East African Crude Oil Pipeline, or EACOP. The heated pipeline will carry the crude from Uganda through Tanzania to Tanga Port on the Indian Ocean.
At Tanga, the crude will be loaded onto tankers and shipped to international buyers and refineries. Where will the oil go? Who will buy it? Who gets the money? And what do Ugandans actually get from it?
The crude that leaves Uganda is not the petrol or diesel that motorists put in their cars. A refinery takes crude oil and separates and processes it into different products.
These can include petrol, diesel, kerosene, jet fuel, LPG, lubricants and other petroleum and petrochemical products.
That is why Government’s oil plans go beyond simply exporting crude. Uganda wants to develop a refinery and related infrastructure so that more value can be added to its petroleum resources and finished products can be supplied to Uganda and regional markets.
Now, who gets the oil money? This is where it gets interesting. Government will not take 100 per cent of the money from every barrel. Under the production-sharing arrangements, oil companies recover eligible costs according to their contracts.
Government then receives money through royalties, taxes, its share of profit oil and State participation. The profit oil, the oil left after allowable cost recovery is shared between Government and the companies according to the relevant agreements.
Government’s petroleum revenues are managed under a legal framework that includes the Petroleum Fund at the Bank of Uganda, while royalties are subject to provisions for sharing with local governments. So don’t expect an oil cheque at your doorstep.
There is no single fixed percentage such as “Government gets 60% and companies get 40%” for every barrel. The actual sharing changes depending on the production-sharing agreement, costs recovered, production level and the applicable fiscal terms.
Uganda’s Petroleum Authority (PAU) currently estimates Uganda has about 6.5 billion barrels in place, of which approximately 1.4 billion barrels are recoverable under current conditions. At a projected peak production rate of around 230,000 barrels per day, PAU says the discovered resources could last roughly 25–30 years, although its more recent UNOC material puts the planned lifecycle of the current Tilenga and Kingfisher reserves at 25 years. Additional exploration and development of contingent resources could extend this period.
Tilenga is designed for 190,000 barrels per day, while Kingfisher is designed for 40,000 barrels per day, giving a combined peak of about 230,000 barrels per day.
In both Tilenga and Kingfisher, the partners are: TotalEnergies that owns a 56.67% share, CNOOC with 28.33% and
UNOC (Uganda) which takes 15%. The shares are (participating interests) in the oil project, not shares of the money from every barrel sold.
So imagine they are opening a shop together with Shs100. TotalEnergies puts in Shs56.67, CNOOC puts in Shs28.33 and
Uganda/UNOC puts in Shs15. That is what the 56.67%, 28.33% and 15% mean.
It does not mean that when one barrel of oil is sold, TotalEnergies automatically takes 56.67% of the selling price and Uganda takes 15%.
When the oil is produced and sold, Uganda gets money through several channels. Oil is produced , oil is sold, money comes in and the Government takes its legally agreed payments, the remaining profit is shared according to the petroleum agreements.
Uganda’s main sources include: Royalty where the oil companies pay Government a royalty for producing oil. Government’s share of profit oil, which is after allowable costs are dealt with, the remaining oil/profit is divided between Government and the companies according to the production-sharing agreement.
Taxes where the oil companies also pay taxes on their taxable profits and other applicable taxes. Then, Uganda’s 15% participation through UNOC. UNOC is a partner in the projects. Because Uganda owns that 15% participating interest, Uganda also participates commercially in the project.
The 15% is not Uganda’s total share of the money earned from selling the oil.The exact amount Uganda will receive from each barrel cannot be stated as one simple percentage, because it depends on royalties, recoverable costs, the production-sharing formula, taxes, production levels and other fiscal terms.
Then how does the ordinary Ugandan benefit? Oil needs drivers, engineers, builders, security guards, caterers, cleaners, suppliers, technicians and many other workers.
Ugandan companies can supply transport, food, accommodation, construction materials, engineering services, security and other goods and services. The Government’s share of oil revenue can support infrastructure and public investment like electricity, roads, railway investment can reduce transport costs, irrigation can support agriculture.
Government also wants more than crude exports. UNOC is also expected to take on a bigger commercial role as Uganda moves into production.
So the real oil story for the ordinary Ugandan is not simply “Uganda has oil.”
