It has been said that the recent fall and volatile nature of the oil price has undeniably affected exploration and production companies on a global scale. Oil and gas companies are undoubtedly being forced to adjust the way in which they operate within all areas of business. Chris Bredenhann, PwC Africa Oil and Gas Advisory Leader has commented, “oil and gas explorers will be relooking at their budgets and deciding where to allocate their limited capital spend given the substantial decline in the oil price. Overall, low oil prices could have an impact on production undermining certain players in the market.”
Two of Uganda’s oil companies, Tullow Uganda and Total E&P Uganda, portray uncertainty as the two oil giants prepare to lay off a number of employees in the coming months during a time where confidence is low in the market. Jeff Mbanga of The Observer has said, “Halliburton, one of the midstream companies operating in Uganda’s oil industry, recently announced it would cut thousands of jobs across its global operations. Shell has also undertaken similar measures as it seeks to reduce its costs.” As a result of the uncertainty surrounding the larger players, their share prices have dropped more than ever before.
OPEC is going to meet in Vienna later this year to discuss key steps which should be taken to aid the recovery of the oil price. As of yet, the group have not given any hints as to what these steps will entail. Following the summit, it is hoped that more light will be shed on the industry’s near future. Project extensions are undeniable; Uganda had promised to produce its first barrel of oil by 2008, however numerous predictions have extended this deadline to 2020. Also, despite delays, Mbanga has said that they are determined, as “while it is clear the country is behind schedule, the ministry, as early as February, still promised that oil production would be in 2018.”
Edited from press release by Claira Lloyd