The Impact of COVID-19 on Uganda ‘s Oil and Gas Sector – Q&A

A Q&A with Ms. Proscovia Nabbanja

Provide some insights into the global energy industry’s readiness and response during the novel coronavirus (COVID-19) pandemic, with particular focus on the Oil and Gas Sector.

Health, Safety and Environment are core values within the Oil and Gas Sector globally. Most companies reinforced already existing measures of health and safety to address the impact of COVID 19 on their operations. A big number of Oil and Gas companies have contributed to the WHO Fund to provide Personal Protective Equipment (PPE) for medical workers who are at the frontline in the fight against COVID-19. At UNOC, we have a Health and Safety leadership Committee who acted quickly in providing our Staff with guidelines in protecting themselves and others from spreading the disease. We have also combined efforts with other corporate entities in facilitating the Ugandan health workers with PPE.

What has the impact of COVID-19 been on the business continuity of companies/organizations across the Energy sector value chain? How has this affected your operations, particularly as UNOC? How is UNOC trying to keep afloat even with the various challenges brought about by COVID-19? Give examples of what UNOC is doing to adapt to the disruption?

Many companies across the energy sector had to move quickly to maintain business continuity; this includes carrying out risk assessments on schedule, cost and supply chain depending on the phase of operation. In Uganda, we have had a total lockdown scenario. At UNOC, most of our projects are in the pre-FID phase, so the impact has been relatively low. However, we had to quickly activate our business continuity plan to enable our staff to work remotely with ease. This was in addition to interventions of travel bans both locally and internationally. Our COVID management plan addressed both management on-premise and home environment and ensured alignment with the guidelines by the Ministry of Health and Presidential Directives. This is continuously updated and communicated. At an operational level, we set up different online tools, including Microsoft Teams, Skype for Business etc. that allow our Staff to maintain virtual collaboration and communication while delivering on our objectives.

What are some of the opportunities for disruptive innovation created out of this business unusual’ situation for UNOC.

One of the positives from this unfortunate situation is that idea generation has come to the fore. UNOC is blessed to have Staff with diverse experience from different industries. Because we have continued our operations, Staff have had to come up with creative ways of achieving their critical tasks. This has led to the birth of lots of new ideas that will change the way we work for the better. Through our Innovation team (the I-team), we have developed an ideal collaboration platform that allows Staff to submit any innovative ideas they have about their operations in a transparent manner and generate discussion in real-time. Lots of ideas are already coming through this initiative that will improve our daily operations and we shall continue to engage in these discussions and decide what we can implement in our current circumstances. Indeed, there is the possibility that there may be an idea or two that will disrupt the way we work forever.

What are the most valuable lessons the sector can take post-COVID-19?

The most valuable lesson is agility, we are going to see changes in workplace strategies post COVID-19. We have therefore used this time to encourage staff to improve on their skills with virtual learning platforms and brainstorm around opportunities for innovation to prepare for the bounce back.

Do share on the complex challenges & opportunities that the Future of Uganda’s Oil and Gas Sector is likely to How does the oil price plunge impact the planned exploration and development phase activities?

UNOC’s projects are mostly in the pre-FID phase. We, therefore, have a more medium- long term outlook on our investments.

The low-price environment is as a result of COVID-19 related demand reductions and a supply glut due to production increases by Saudi Arabia. We know that negotiations are ongoing between OPEC and Non-OPEC producers and this dialogue will hopefully have positive outcomes.

We expect that demand will recover in the medium term – once the world finds a solution to the COVID-19 crisis and economic activity resumes fully. We also hope that the supply glut will auto-correct as the market adjusts production levels and physical inventories of crude oil to meet prevailing market conditions. While a delay in FID for our projects is now inevitable, our outlook is that the fundamentals of our project (low-cost fields, low Sulphur crude oil and a rapidly growing market) will support a positive FID as soon as possible.

On the exploration front, UNOC is preparing for participating in the second licensing round together with a Joint Venture Partner (JVP). The number of blocks we will bid for will be determined upon further evaluation of the available data.

In the downstream, economic disruptions could lead to recession for most economies, as coronavirus continues to impact global stocks. Some countries are starting plans to fill their Strategic Petroleum Reserve (SPR) with cheap oil. There is an opportunity here.

How can Uganda’s Oil and Gas sector succeed in the context of disruption (COVID-19)? What opportunities and interventions for leading-edge innovation have been or can be created?

COVID-19 has forced a critical discussion about our traditional ways of working. Business continuity plans had to be fast-tracked and put into implementation mode right away. The agility of our operations has been tested, and I am proud to say that we have coped well because we have remained operational to the extent that remote working has been possible. Meetings have continued, e.g. we had an all-staff meeting on our Microsoft

Teams platform a couple of days ago, we are interfacing with business partners and stakeholders remotely where previously physical presence would have been the preferred option. This adjustment is working well.

It is now clearer more than ever that we may not need to be in the same physical space for operations to continue, save for those that require field operations but even in this space, I believe companies are going to innovate around AI, Robotics and Machine learning. We are bound to see some changes in the field operations space.

Discussions around the need for more rooms, more parking area may be looked at in a new light. We now must ensure that we continue to invest in technology that allows us to continue working effectively without necessarily being in the same physical space. We may need to have a new delicate mix in our operations. For example, which tasks require physical presence at the office during set times? Which tasks can be effectively done remotely? Must we have the same standard working hours for all Staff? Are there roles that can be redefined? These are discussions that will continue globally post-COVID-19. It is going to be a test of our agility to innovate, reduce cost, improve efficiency, attain schedule and the ability of our businesses to remain relevant in the long term.

The global travel ban resulting from locked down airports has also called for adjustments to some of our programs such as our training program. We have been able to ensure that we continue to build the capacity of our staff at this time. This has been possible through our partnership with the International Human Resource Development Corporation (IHRDC) to provide online training courses for Staff.

 

As the global oil prices continue to fluctuate to lows not seen since the doldrums of 2016, how does Uganda’s Oil and Gas industry plan to attract investors?

UNOC is working with the Government, through its shareholders to secure the required funding. We are considering all options that will bring funding for these projects at the lowest cost possible. To ensure that all options are reviewed, UNOC has retained advisory services to help in this analysis and process. We are confident that the funds required will be availed in time to enable UNOC to participate in these very critical strategic and profitable projects. We also expect the appetite for Uganda’s crude oil to remain high. This is because the demand for crude oil will recover in the medium term – once the world finds a solution to the COVID-19 crisis and economic activity resumes. Crude oil will continue to contribute significantly to the world’s energy supply at least until 2050.

 

How can Uganda’s Oil and Gas sector achieve environmental sustainability i.e Green Petroleum’ Status?

Uganda is making great strides towards achieving environmental sustainability in the Oil and Gas Sector through policy and regulation as seen in the National Oil and Gas Policy 2008 and the Petroleum Exploration, Development and Production Act 2013. Additionally, The Oil and Gas Companies are mandated to complete Environmental and Social Impact Assessments before carrying out operations to avoid compromising the quality of the environment. In UNOC, The Uganda Refinery and the Bulk trading business are also developing LPG as a business line which is critical to Uganda’s long term energy transition.

Thank you for your time and insights!

 

A little about Ms Proscovia Nabbanja – UNOC CEO

Proscovia has 19 years of experience in oil and gas industry. Formerly served as a Principal Geologist in the Petroleum Exploration & Production Department under the Ministry of Energy and Mineral Development. She headed the Technical Division and was at the forefront of reviews of technical proposals especially field development plans and petroleum reservoir reports.

She headed the estimation and reporting of the oil resources and reserves in the country, field operations monitoring and management of petroleum data.

She has sat on a number of inter-ministerial committees and also worked on a number of Donor funded programs such as Oil for Development and USAID. Proscovia holds a BSc (Chemistry, Geology) -MUK, MSC Petroleum Geoscience- Imperial College of Science Technology and Medicine, DIC, Dip Petroleum Management and Operations, MBA-Imperial College Business School.