Reassessing oil in Uganda in Oil & Companies News 02/02/2026 Three-and-a-half years after TotalEnergies, China National Offshore Oil Company, the Uganda National Oil Company, and the Tanzania Petroleum Development Corporation announced a final investment decision (FID) for the first phase of Uganda’s new oil industry, construction is reportedly more than halfway complete, with more than USD6 billion already invested at the end of 2024. The project includes development of more than 1 billion barrels of oil at the six Tilenga oil fields, operated by TotalEnergies, and the Kingfisher field, operated by the China National Offshore Oil Company (CNOOC), as well as the construction of the 1,443-kilometer East Africa Crude Oil Pipeline (EACOP), which routes through Tanzania to the port of Tanga for oil export. Oil has long been touted for its transformative potential on Uganda’s economy, bringing a short-term boom in foreign direct investment, significant new government revenues, and trade balance benefits that could be amplified by a planned refinery project. However, project delays, cost overruns, and changes in global oil and energy markets since the FID mean that the project is likely to be a disappointment for investors and the Ugandan economy. Questions have also been raised about the project’s economic viability, given the accelerating global action on decarbonization. A 2020 analysis by non-profit Climate Policy Initiative’s Energy Finance (CPI EF) team found that delays had eroded 70% of the Ugandan oil industry’s potential value and identified significant economic and financial hurdles to overcome before an economically viable proposition could be reached. This report provides an updated position on the issues addressed in the CPI EF 2020 report: Does it (still) make sense to proceed to oil production? What economic, financial and policy options do each of the key parties have? How might geopolitical volatility and a world grappling with intensifying climate change and an increasingly “disorderly” transition influence the value of those options? The analysis identified three key findings: Finding 1: Uganda’s oil industry is delayed, over budget and its results are likely to fall well short of expectations. At the time of FID, oil production was slated to start in 2025, but first oil now appears to have slipped until late 2026 or 2027. The project’s total construction cost is expected to be significantly higher than the initial budget, particularly for the EACOP. Recent public estimates put EACOP’s likely cost at around USD5.6 billion, a 55% increase from the USD3.6 billion projected shortly before FID. Over the same period, oil markets and the global economy have also gone through a period of significant volatility and structural change that has contributed to a lower long-term outlook for global oil prices than when the FID was made. Russia’s invasion of Ukraine threw global energy markets into turmoil. Prices of major energy commodities and products spiked significantly in 2022. Sanctions and the responses to sanctions have dramatically altered the shape of the global energy trade. Russia exports almost 15% less oil today than it did in 2022, but the impact of reduced Russian supply has been outweighed by continuing growth in U.S. production; growth in areas such as Brazil and Guyana; and the unwinding of COVID-19-era output cuts from the OPEC+ consortium. This, combined with a weakened demand outlook caused by the impact of U.S. ta