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Uganda’s plan to use future revenues from its emerging oil industry to drive economic development may not work as expected, because evidence so far shows that the government’s effort to extract and export its crude oil may not produce the returns it is counting on, analysts have warned.

A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) found that Uganda stands to benefit far less from oil production than previously projected, with revenues set to be half of earlier estimates if the world transitions away from fossil fuels on a path to reaching net zero emissions.

Uganda’s oil ambitions involve developing two oilfields on the shores of Lake Albert – Tilenga and Kingfisher – and constructing the 1,443-km East African Crude Oil Pipeline (EACOP), with the aim of transporting 230,000 barrels of crude per day to Tanzania’s Tanga port for export.

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Led by oil major TotalEnergies and China National Offshore Oil Company (CNOOC), alongside the Uganda National Oil Company (UNOC) and Tanzania Petroleum Development Corporation, the project was given the financial go-ahead in 2022.

Will Scargill, one of the IEEFA report’s authors, told an online launch this week that oil may have seemed a historically attractive option for Uganda but the benefits it could yield are very sensitive to major risks, including cost overruns around the project and in the refining sector, which it also plans to enter.

“The EACOP project is expected to cost much more than the original expectations, so it’s a major project risk in Uganda as well,” he said.

The start of oil production and exports through the East Africa pipeline had been expected by 2025 – nearly 20 years after commercially viable oil was first discovered in the country – but has now been delayed until late 2026 or 2027.

Meanwhile, the cost of construction – particularly for the EACOP part of the project – has continued to rise, reaching around $5.6 billion, a 55% increase from the $3.6 billion projected shortly before it got financial approval, the report said.

African banks back oil export pipeline despite climate commitments
Ugandan riot police officers detain an activist during a march in support of the European Parliament resolution to stop the construction of the East African Crude Oil Pipeline in Kampala, Uganda October 4, 2022. REUTERS/Abubaker Lubowa

US tariffs, China’s EV boom to curb oil revenues

Beyond delays and cost overruns, “there’s the risk the impact of the accelerating shift away from fossil fuels will have on the oil market,” Scargill said.

The report said the most significant factors for the Ugandan oil industry – which are beyond its control – have been the reduced outlook for international trade spurred by recently imposed US tariffs and the growing uptake of electric vehicles (EVs), particularly in China – which has led to a peak in transport fuel demand and an expected peak in overall oil consumption by 2027.

The 2025 oil outlook from the International Energy Agency (IEA) shows that growth in global oil demand will fall significantly by the end of the decade before entering a decline, driven mainly by electrification in transport which will displace 5.4 million barrels per day of global oil demand by the end of the decade.

In addition, structural changes in global energy markets, including oil supply growth outside the OPEC+ bloc – a group of major oil-producing countries including Saudi Arabia and Russia that sets production quotas – particularly in the US, Brazil and Guyana, are lowering prices.

“It’s a particularly bad time to be taking single big bets on particular sectors that are linked to external markets,” said Matthew Huxham, a co-author of the IEEFA report.

    To make matters worse, Uganda’s public finances have been weakened in the past decade by external shocks including higher US interest rates and commodity prices, resulting in downgrades of the country’s sovereign credit rating, he added.

    “What that means is, generally speaking, there is less fiscal resilience to shocks,” Huxham said.

    Lower global demand for oil would likely see lower prices, profits and revenues for the Ugandan government, the report authors said. In addition, a global shift to renewable energy would mean Uganda selling even fewer barrels into international markets.

    All of these factors suggest that investment in Uganda’s oil industry “would unlikely be as transformational as expected” for its development, Scargill said.

    Climate Home News reached out to the Uganda National Oil Company and EACOP but had not received a response at the time of publication.

    Foreign investors to recover costs while Uganda faces risks

    Uganda has invested a significant amount of government funds not only in the oil pipeline but also in supporting infrastructure such as a planned refinery. The report authors raised concerns about revenue-sharing agreements under which foreign investors are entitled to recover their costs first, taking a larger share of oil revenues in the early years of production.

    IEEFA estimates that while TotalEnergies’ and CNOOC’s returns could fall by 25-34% as the world uses less oil and moves from fossil fuels to clean energy, Uganda’s expected revenues could decline by up to 53%.

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    Uganda is pursuing a $4.5-billion oil refinery project in Hoima District, with the country’s oil company UNOC due to take a 40% stake. To finance part of this investment and other oil-related infrastructure, UNOC has secured a loan facility of up to $2 billion from commodity trader Vitol.

    Under the deal, Vitol gains priority access to oil revenues, placing it ahead of the Ugandan government when money starts flowing in, the report said. The IEEFA analysts warn that this will likely displace or defer planned use of the revenues for other government spending on things like health, education and climate adaptation, especially if oil production and the refinery construction are delayed or profits disappoint.

    “Even if the refinery project is on time and on budget, the refinery and loan repayments could consume 40% of Uganda’s oil revenues through 2032,” Scargill noted.

    Pointing to recent cost overruns at oil refinery projects in Africa, the report authors said Nigeria’s
    Dangote refinery ended up costing more than twice the original estimate – jumping from $9 billion to over $18 billion.

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    They said analysis shows the Uganda refinery will cost 25% more than planned, on top of an expected overrun of over 50% on the EACOP project, cutting the annual return rate to 10%.

    “This means there is a high chance the project, by itself, will not make any money,” the report added.

    Responding to the report, the StopEACOP coalition said the analysis confirms that beyond causing ongoing environmental harm and displacing hundreds of thousands, the project “does not make economic sense, especially for the host countries”.

    They called on financial institutions, including Standard Bank, KCB Uganda, Stanbic Uganda, Afreximbank, and the Islamic Corporation for the Development of the Private Sector, which are backing the “controversial” EACOP project, “to seriously engage with the findings of the IEEFA reports and reconsider their support”.

    Prioritise climate-resilient investments instead

    In another report released alongside the one on oil project finances, IEEFA argued that Uganda could achieve stronger and more effective development outcomes by redirecting its scarce public resources towards climate-resilient, electrified industrialisation rather than doubling down on oil.

    Uganda is among the countries most vulnerable to climate change, yet ranks low in readiness to cope with its impacts. The report authors urged the government to apply stricter criteria when deciding how to spend public funds, focusing on things like improving access to modern energy services and climate adaptation.

    The IEEFA report recommended investments in off-grid and mini-grid solar electrification, agro-processing, cold storage, crop irrigation and better roads as lower-risk alternatives to investing in fossil fuels.

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    Investments that take climate risks into account could also attract concessional climate finance and align with Uganda’s fourth National Development Plan and Just Transition Framework, the report said.

    “They also take less long to construct, are easy to deploy, pay back over a shorter period and they also put less pressure on the system,” Huxham added.

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    Uganda may see lower oil revenues than expected as costs rise and demand falls

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    New Zealand moves to protect business with law curtailing climate litigation

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    New Zealand’s parliament has adopted a controversial new law blocking a whole avenue of climate litigation and shutting down its most advanced corporate lawsuit, which has been blamed by the government for shaking business confidence and investment.

    The Climate Change Response (Tort Liability) Amendment Bill, expected to take effect in the coming days after it is formally signed by the Governor-General, prevents all current and future civil claims for climate loss or harm under tort law.

    Justice minister Paul Goldsmith said last week that the aim was to give businesses “certainty around their climate change obligations”, noting it would not alter the government’s responsibilities under the Climate Change Response Act 2002 nor business obligations under the Emissions Trading Scheme.

    “Our response to climate change is best managed by the Government at a national level and not through piece-meal litigation in the courts,” he added in a statement.

    Such litigation, he said, “risks developing a new regime that contradicts the framework Parliament has already enacted” to tackle climate change.

      Goldsmith singled out a key domestic climate lawsuit brought by Northland iwi leader and activist Mike Smith against six big companies: dairy firms Fonterra and Dairy Holdings, energy firms Genesis Energy and Z Energy, New Zealand Steel and coal mining firm BT Mining. A seventh original defendant, Channel Infrastructure, was dropped after it permanently decommissioned its Marsden Point oil refinery.

      Smith argued that these companies had caused him harm under public nuisance and negligence law, as well as a third breach of a duty to cease contributing to climate change that has yet to be tested domestically. He did not seek financial compensation, instead asking for the companies to immediately stop emitting or contributing to net greenhouse gas emissions.

      In one of the most advanced corporate climate accountability lawsuits in the world, a trial had been scheduled for April 2027 after the Supreme Court unanimously allowed the case to continue.

      Corporate lobbying in the shadows

      Smith described the passing of the bill as “deeply concerning”, particularly as it coincided with the Supreme Court hearing another of his climate lawsuits. In that case, Smith v Attorney-General, he argues that the government’s response to climate change and its impacts on Māori communities in particular breaches rights to life and culture.

      “That timing raises profound questions about the separation of powers and the rule of law,” said Smith. “Whatever one’s view of the merits of these cases, it is deeply troubling when parliament intervenes to remove a legal pathway while the courts are actively considering fundamental questions about climate responsibility, rights and the crown’s obligations.”

      The bill – which says that no person (including the government) can be found liable in tort for emissions-related climate change effects – followed major lobbying efforts by the companies defending themselves in Smith’s lawsuit. They outlined a proposed legal amendment in a briefing note to the government in 2024.

      The centre-right government has been fiercely criticised over its lack of transparency in relation to this lobbying activity. The national ombudsman recently found that the Prime Minister’s Office effectively withheld information requested by the Environmental Law Initiative about meetings, discussions and conversations regarding Smith’s case.

      Green groups fail to stop bill

      The bill sparked huge concern among environmental campaigners in New Zealand and elsewhere. Greenpeace Aotearoa called it a “shocking abuse of executive power” and the vast majority of submissions to a parliamentary inquiry said it should be rejected.

      But in the end, it was adopted with little resistance, moving relatively smoothly through parliament, passing its third reading by 67 votes to 53. Sam Bookman, climate law lecturer at Melbourne Law School, told Climate Home News he was not surprised by this, given that the coalition government has a secure majority.

      A complaint has been made to the UN special rapporteur on climate change and human rights by Smith, the National Iwi Chairs Forum Pou Tikanga and youth coalition Climate Clinic Aotearoa over what they see as the government’s heavy-handed approach. Smith is also challenging the new law in yet another lawsuit.

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      Bookman thinks it “very unlikely” that such a challenge will succeed, noting that New Zealand’s constitution is firmly anchored in parliamentary sovereignty.

      But the expert in climate law does not see the bill as the end of legal action in the country, noting that New Zealand has a “sophisticated climate litigation landscape with a growing number of specialist and experienced lawyers and NGOs”.

      The country is also approaching its next general election in November, and some opposition parties have pledged to restore access to the courts if elected.

      Amanda Larsson, global project lead on agriculture for Greenpeace International, said: “This law deserves to be tested, and I strongly encourage the international climate litigation community to unite and help defend New Zealanders’ fundamental right to hold polluters accountable before this becomes a global blueprint.”

      Copycat legislation on the rise

      New Zealand’s move is part of a small but growing legislative effort to shut down climate litigation around the world.

      In the US, Republican politicians introduced legislation in the House and Senate in April that would shield fossil fuel firms from climate liability lawsuits. Similar laws have already been passed at state level in Tennessee, Utah, Iowa and Louisiana.

      The German state of Bavaria has put forward a similar proposal to the Federal Council, aiming to block private climate claims as well as the recognition and enforcement of foreign judgments imposing such liability. There are also proposals to limit available remedies and actions in the Netherlands and Belgium.

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      Bookman said he expects more efforts to counter climate damages litigation and advised plaintiffs to think about how to respond, including drawing on broader support in opposing them.

      “Even though it’s very hard for plaintiffs to win these types of cases, companies are very eager to avoid the expense, embarrassment and political accountability that come even with unsuccessful lawsuits,” he said.

      The post New Zealand moves to protect business with law curtailing climate litigation appeared first on Climate Home News.

      New Zealand moves to protect business with law curtailing climate litigation

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      Indonesia’s nickel production cuts are not enough to create a sustainable industry 

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      Bhima Yudhistira Adhinegara is the Executive Director of the Center of Economic and Law Studies (CELIOS), an Indonesia-based economic think tank. Muhammad Zulfikar Rakhmat is the Director of the China-Indonesia desk at CELIOS. 

      Indonesia produces around 60% of the world’s nickel, a metal used to manufacture batteries for electric vehicles (EVs) – more than any other country in the world. But in 2026, the government sharply reduced how much of its nickel can be extracted from the ground.

      Production quotas were reduced by around 40% this year compared to 2025. Weda Bay, the largest nickel mine on Earth, had its allowance cut by more than 70% and exhausted its full-year quota by the end of May, halting mining entirely; it cannot resume large-scale extraction until next year unless regulators grant an extension.

      The policy has sparked a vivid debate in Indonesian policy circles: how can the country shift its strategy from a decade of mining vast quantities of cheap nickel to producing a high-value and low-carbon material that the rest of the world wants for EV batteries.

      The cuts aren’t a silver bullet to clean up Indonesia’s nickel industry, whose smelters are powered by coal – the most polluting fossil fuels. But alongside stricter enforcement of environmental rules, it is one side of efforts to produce more sustainable nickel for a premium.

      Restricting Indonesia’s nickel output

      Production quotas were introduced to stop the collapse of nickel prices because of oversupply in the market. Prices had fallen more than 40% in 2023 alone and kept sliding as Indonesian supply kept growing, hitting a four-year low of around $13,900 a ton in late 2025.

      Critics called the recent tightening of production quotas proof that Indonesia’s nickel strategy has failed, arguing that the industry shouldn’t need to throttle its own output to survive. But when assessed against what the policy was supposed to do – push up nickel prices – it has worked. Prices jumped to $20,000 a ton in May, the highest since 2024.

        Chinese industry groups representing companies that have invested billions to mine and refine the country’s nickel were furious, warning Indonesia’s president Prabowo Subianto that the cuts put $50 billion worth of investment at risk. But much of that Chinese capital is sunk into smelters and processing plants built specifically to run on Indonesian ore, and cannot simply be moved elsewhere. That gives Jakarta more room to hold its ground than the warning suggests.

        Stronger environmental enforcement

        Since the start of the year, Indonesia’s forestry task force has seized more than four million hectares of land from mines and plantations operating illegally in protected forests, collecting over two trillion rupiah ($113 million) in fines.

        This included 148 hectares seized from Weda Bay for lacking a forestry permit. The share of nickel produced from illegal small-scale mining also fell from about a quarter in 2022 to roughly 10% by 2024.

        The crackdown responds to serious environmental damages in the nickel industry. On Obi Island, a waste pond collapsed after heavy rain in June 2025, flooding three villages and killing a resident. Internal company tests found chromium-6 – a carcinogen – in the water, in quantities far above the legal limit. The footprint of another mine near Raja Ampat, which is home to some of the world’s richest coral reefs, grew 60-fold in just eight years.

        A coastal village is wedged between the sea and a large nickel mine in Indonesia
        The fishing villages of Tapunggaya in Sulawesi, Indonesia, are squeezed between the sea and an expanding nickel mine (Photo by Garry Lotulung/NurPhoto)

        The market is responding to early cleanup efforts. Low-carbon nickel now sells for a real premium, roughly $18,800 to $19,300 a ton compared with $17,900 to $18,300 otherwise, as carmakers seek to source cleaner materials to comply with the European Union’s new emissions rules for imports.

        In turn, this is incentivising the industry to do more to green its operations. Vale Indonesia’s smelter in South Sulawesi now runs almost entirely on hydropower, for example.

        None of this addresses coal use, however. Major Indonesian nickel producers still emitted an estimated 15 million metric tons of greenhouse gases in 2023. Indonesia may be cracking down on illegal mining and rewarding cleaner producers but it is still running its mines on the dirtiest fuel available.

        Unequal benefits

        For Indonesia to truly benefit from producing cleaner and high-value nickel, it needs to reap the economic benefits too. Although the industry has boosted the country’s economic growth, the reality on the ground tells a different story.

        Konawe in Southeast Sulawesi is home to a major smelting complex. Growth in the district jumped from 6% to 22% between 2015 and 2023, driven almost entirely by the nickel industry, according to a study by the Lowy Institute study. At the same time, poverty levels increased slightly and unemployment remained unchanged.

          In Halmahera, another epicentre of the nickel industry, spending by the poorest fifth grew just 5% between 2019 and 2022, compared with 28% for the wealthiest fifth, according to a separate study.

          Part of the reason for this inequality is the system for transferring mining royalties to district authorities where the mines are located. In theory, they are entitled to the largest share. But in practice, payments are delayed, companies routinely dispute what they owe and royalties are pooled and distributed across a larger area.

          The Natural Resource Governance Institute has found that decentralisation handed local governments power to approve new mines faster than they could build their capacity to manage them. Higher output raises national income on paper, but local governments remain constrained by fiscal rules and infrastructure costs that scale with mining.

          None of this makes the 2026 quota cuts a mistake. Indonesia has every right to defend its pricing power over a resource it controls. But limiting extraction isn’t going to fix underlying issues around environmental enforcement and revenue-sharing. That requires rules that are consistently enforced, royalties that reach communities living by the mines, and a plan to wean smelters off coal.

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          Indonesia’s nickel production cuts are not enough to create a sustainable industry 

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          Risk of “catastrophic” oil spill reaching Kimberley coast found in Woodside’s Scott Reef gas drilling plans

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          SYDNEY, Monday 24 August 2026 – New analysis of Woodside modelling released by Greenpeace Australia Pacific and Environs Kimberley has revealed the oil and gas corporation’s plans to drill at Scott Reef could cause an oil spill up to 30 times bigger than the 2009 Montara disaster, impacting the Kimberley coastline and reaching as far as Indonesia.

          The new analysis details the “catastrophic” oil spill risk put to environmental regulators for approval by Woodside in its Browse to North West Shelf Project (Browse) plans, the worst-case scenario being a blowout directly below Scott Reef, polluting whale migratory pathways and covering isolated turtle nesting ground with oil condensate.

          An FOI application (F348) revealed the federal environment department (DCCEEW) asked offshore oil and gas regulator NOPSEMA to look into the oil spill risk in 2025. NOPSEMA’s response to the application refused access to its report, and one document shows DCCEEW sought further advice this year.

          Greenpeace and Environs Kimberley are calling on the Federal Government to publicly release the NOPSEMA report given the risk of an uncontrolled release of oil condensate from directly below Scott Reef.

          Hannah Schuch, Senior Campaigner at Greenpeace Australia Pacific, said: “Woodside is aware that drilling at Scott Reef risks a massive oil spill that would have severe, far-reaching consequences. It appears environmental regulators are aware too.

          “The state and federal governments need to take this risk from Woodside’s drilling plans seriously, as they could end up allowing the worst oil spill in Australian history.

          “The pygmy blue whales that migrate up and down the WA coast with their newborns each year could be swimming and feeding in toxic, oil-slicked water. Woodside’s proposal to drill at Scott Reef is an environmental disaster waiting to happen, and the WA and federal governments have one surefire way to prevent catastrophe — reject Browse.”

          Martin Prichard, Executive Director at Environs Kimberley, said: “A catastrophic oil spill by Woodside would be disastrous not just for marine life in the area but also for the Kimberley’s $500 million tourism industry.

          “The state and federal governments will see five marine parks on the Kimberley coast included in the risk area of a catastrophic Woodside oil spill.

          “The Montara oil spill was disastrous for West Timor with the toxic oil destroying seaweed farmers’ livelihoods. The Kimberley dodged a bullet with Montara, we were lucky the spill didn’t head our way. Myself and a crew flew over the Montara oil spill and followed it as far as we could. It was like a scene from a disaster movie.”

          After the WA Environmental Protection Authority deemed Browse “unacceptable” due, in part, to oil spill risk, Woodside submitted a mitigation plan based on technology that has never been used “in anger”, a weakness stated in an independent expert review of the plan.

          Professor Richard Steiner, independent oil spill expert, said: “A large offshore spill is impossible to effectively contain or recover. Historically, only 2-6% of total spill volume is recovered and the ecological injury from the release of toxic hydrocarbons in the sea can be severe, extensive, and long-term.

          “Here in Alaska, government research concludes that several marine populations injured by the 1989 Exxon Valdez oil spill, including whales, fish, and seabirds, are still not recovering today, 37 years later. We should expect similar long-term ecological impacts in Western Australia if there were to be a major oil spill. The only sure way to avoid the risk of a catastrophic marine oil spill is to not develop oil and gas projects in marine environments.”

          -ENDS-

          Media contact

          Emma Sangalli on emma.sangalli@greenpeace.org or 0431 513 465

          Risk of “catastrophic” oil spill reaching Kimberley coast found in Woodside’s Scott Reef gas drilling plans

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