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Archive for the tag “Total”

Opinion: Magufuli should look at Acacia before he throws shade at Museveni!

President John Pombe Magufuli has advised President Museveni to sacrifice part of the 185m USD tax bill charged by the URA to conclude plans for the construction of the crude oil pipeline and begin the project forthwith in order to create jobs” (NTV Uganda, 07.09.2019).

Today, is yet another day of hypocrisy. It is not new, but just another story like that. As the Tanzanian President Magufuli is right that Uganda Revenue Authority and their winning of a Court Case, which entails a tax-dispute between Tullow Oil has suspended the development of the pipeline and the drilling in parts of the Lake Albert Basin. As the farm-down agreement between three parties, Tullow, Total and CNOOC is on-hold.

That is where the Tanzanian President is right. Period. However, he is wrong in a whole other sense. Should President Yoweri Kaguta Museveni tell his counter-part, that he should mind his own business? Yes, actually. Because, in this manner. The Tanzanian one is doing the same battle with anther extraction industry. The mining industry, the Acacia Mining tax scandal. Where the the company has to back-pay the government.

This the Tanzanian counterparts slapped on the company by in 2017. The same sort of settlement the Ugandan did with Tullow in 2015, as the Republic wanted back-taxes for the investments done in the territory. That is why Magufuli shouldn’t whine about this.

Surely, we know Magufuli wanted the man-power, the taxing rate of the movement of goods through his United Republic and secure the usage of Tanga Port. Museveni knows this, but he wants the tax for the operations done by both Heritage and Tullow. That is trying to ditch the back-pay on other companies whose buying their stake in the Lake Albert Basin.

Therefore, with the knowledge of the Acacia scandal, that is still going on to this day. Magufuli wanted back-pay for lack of taxes from the mining industry. Which is righteous, just like Museveni does at his place. The Tullow has now used years from 2015 to 2019. Acacia has now used 2017 to 2019. In 2018, the ownership of Acacia said it looked forward to negotiations with the government. This year in February, the company still have no resolution to the back-pay of taxes. That means the government of Magufuli have not fixed the same issue. 

Just like the Ugandans haven’t fixed the farm-down and back-pay of operational taxes. Because, the company trying to configure itself out of taxes. Surely, Tanzania see the same acts by their mining industry. But in this regard, Magufuli wants to earn a dime on the oil exploitation in the Lake Albert Basin.

So, before the Tanzanian get it fixed with Acacia or Barrick in their own dominion. They should give time for Ugandans to fix their own tax dispute. They have even won it in an International Court. Therefore, the Ugandan case is stronger, than the one of Acacia. Whose only internally disputed.

That is why, this isn’t the faults of Uganda Revenue Authority, but of Tullow, whose trying to deflect the payment of taxes in the Republic. Something, Magufuli wouldn’t allow anyone operating in his territory. If so, why this hustle against Acacia and still not stopping it?

Because, Magufuli want the taxes and the proper payment for doing business in the United Republic. Just like Museveni want the proper payment for doing business in the Republic.

So, please Joseph, get your own domain straight, before throwing other people under the bus. Maybe, once in the while accept criticism. That might given your argument a more flair and less selfish reasons for addressing a neighbour and an ally. Peace.

Uganda National Oil Company: Press Release (14.05.2019)

Uganda National Oil Company (UNOC): Dr. Josephine Wapakabulo resignation letter as Chief Executive Officer (13.05.2019)

UNOC Signs Memorandum of Understanding With CNOOC to Start a Partnership in Exploration in the Albertine Graben (05.09.2018)

The Uganda Budget Framework Paper FY2018/19 for Energy and Mineral Development is saying that the External Financing is the key for this Sector – Period!

The Budget Framework Paper for Financial Year of 2018/2019 for the Ministry of Energy and Mineral Development is really revealing how the financing of the sector is and how the state is involved with the manner. Also, how low-key the main factors are and lacking transparency is hitting the Energy Sector of Uganda. Not that is surprising, since the agreements, the licenses and the tenders are usually kept behind closed doors.

However, the main part of the Framework Paper is evident of the issues at hand:

The indicative budget ceilings for the Ministry of Energy and Mineral Development have been rationalised in line with the sector priorities and national priorities as communicated in the Budget Call Circular and in the Presidential Directives. The ceilings for Vote 017 for the FY 2018/19 are as follows: Wage Recurrent is UGX 4.23Bn; Non-Wage Recurrent is UGX 74,04Bn; GoU Development is UGX 307,84Bn and the Development Partner contribution is UGX 1,608.41Bn. Under Vote 123 ceiling is UGX 81.98Bn is for the GoU Domestic Development and UGX594.00Bn is from external financing” (Energy and Mineral Development, Budget Framework Paper FY 2018/19, 2018).

The building of vital infrastructure, the refinery, the pipelines and energy production facilities are all dependent on funding from abroad. If it is grants, loans or paid-in-full agreements done in secrecy. Because, there are more than the shadows of this budget framework paper. It is saying a lot and the votes for the future is showing the future too. That the Ugandan economy is prospering, as the budget are needing all funding from afar to be able to build needed infrastructure. Also, needs the grants for the Rural Electrification, the ones who the state has even borrowed to do.

Therefore, this Budget Framework Paper is showing the troubles ahead. This isn’t voting for better economy, know this is dependency and also proving how much the donors and partners are involved in making sure the economy gets addicted to it.

When it comes to the refinery, the details are clearly still in the wind: “The process of selecting of the Lead Investor is still progressing and the negotiations are ongoing between Government and the selected investor. The process is expected to be completed in FY 2017/2018. There after FEED and ESIA for refinery development will be undertaken with the Lead Investor on board” (Energy and Mineral Development, Budget Framework Paper FY 2018/19, 2018). So the selecting of it is not finalized, well, for some thought Russians had secured agreement and the reason for Museveni to visit Moscow. Clearly, that ship has sailed, we can wonder if Total or any other company would do this. As Total has the biggest chairs of licenses in the Lake Albertine Basin. Time will tell, but another proof of lack of transparency, when the Ministry has to write this.

Procurement Bottlenecks including lengthy bidding processes that require no-objections from the external financiers at each stage of execution. There is need for PPDA to revise guidelines for procurements relating to flagship projects. In addition, the following measures need to be considered: financing agreements are signed, project is almost ready to kick off. PPDA should reduce the administrative review timelines that sometimes stall progress” (Energy and Mineral Development, Budget Framework Paper FY 2018/19, 2018).

This here is initially following the guidelines of the First Amendment of the 1995 Constitution of 2017, the Land Amendment that the National Resistance Movement put forward before the Age Limit. That would fit the narrative of the Ministry and their wishes. It is like reading the same idea, to give more power to the state and able to land issues quickly.

What we can learn, also and which is important, these developments, these infrastructures projects couldn’t have been built if it wasn’t for external loans, externals grants or direct aid, if not on the license fees and the parts that is taxed. However, the grand amount and the majority of the projects needs the external funding.

This is not surprising, it is to be expected because Museveni doesn’t want to use his money. He want to spend other people’s money and also the money of the future. To benefit him today, that is why the deals are done in the secrecy…. We don’t know the reasons and the value of the licenses, the ones who is to build the refinery, even the grand agreement between the Corporations who will build the Pipeline. We know that certain companies has failed to build the dams and used bad material, but that is because of the Chinese Contractors has saved money, while being paid-in-full.

President Museveni blessed that deal and got scraps back. Time will tell, but this isn’t a good look. Not because I want it to be bad, but because the money says so. Peace.

Opinion: President Museveni praises Equatorial Guinea for it’s rampant Oil-Corruption; wants to learn his tricks!

In these days the President Yoweri Kaguta Museveni of the Republic of Uganda are on a state visit in Malabo, visiting and learning tricks from the Equatorial Guinean President Teodoro Nguema Obiang, who has used the oil to enrich himself and his loyal subjects. Not build a welfare state, but make sure the family of Obiang get wealthy. Certainly, Uganda is preparing for their own oil production in the Lake Albertine basin, as the pipeline building from the production to the Port Tanga in Tanzania.

This is why President Museveni are visiting Equatorial Guinea to learn the tricks of the trade, as the state of Uganda are still in the dark of the oil-deals between the international companies and the state. We can wonder how the funds will be spoiled and how Museveni plans to use the oil funds for personal gains. If so, he wouldn’t praise President Obiang, who has his whole career to spend the oil profits from his republic. This is what Museveni wants to learn, since his career has been tricking out all sorts of play from Ugandan republic. The petroleum profits can be misspent and hidden just like in the republic of Obiang. Take a look!

President Museveni’s praise:

We are therefore in Equatorial Guinea for two things: looking at how to support prosperity of one another and how to push for our strategic security. I also congratulate Equatorial Guinea for using it’s oil and gas very well. When I was last here for the AU Summit, I noticed gaps between the airport and the city centre. Today, all these gaps were gone. In their place are new, well-planned buildings. And I see the city is refurbished. Some people say oil is a curse but in Equatorial Guinea it is a blessing” (Yoweri Kaguta Museveni, 26.08.2017)

Business in Equatorial Guinea:

Since the discovery of the offshore oil deposits, many investors have shown great interest in the country. Foreign direct investment inflows into the country had thus been consistently high for the past years. Nevertheless, in 2016 the FDI inflow amounted to USD 54 million, a sharp decrease from USD 233 million recorded the previous year (and the historical peak of USD 2.73 billion in 2010) . The total stock of FDI in the country is currently at USD 13.4 billion” (…) “Corruption in particular is problematic. In addition, the business climate of the country remains rather unfavourable for investment. Cumbersome procedures and high compliance costs slow licensing and make starting a business more difficult. Weak regulatory and judicial systems may discourage foreign investment as well, along with high credit costs and limited access to financing. The government controls long-term lending through the state-owned development bank. Equatorial Guinea ranked 178th out of 190 countries in the 2017 Doing Business report published by the World Bank, losing three spots compared to the previous year” (Santander Trade, 2017).

Son of the President on trial:

The corruption trial of Teodoro Nguema Obiang Mangue, the son of the president of Equatorial Guinea, ended in Paris on 6 July with the prosecution calling for a three-year jail term, a €30 million (US$34 million) fine and the confiscation of assets. The Tribunal will return a verdict on 27 October. The 48-year-old vice-president of Equatorial Guinea was not in court to hear the prosecution’s claim that he used money stolen from his country’s treasury and laundered through a shell company to fund a lavish lifestyle in France” (Transparency International, 2017).

This was what that is well-known of the Equatorial Guinea corruption and the son of President has also had challenging cases in the United States. Now the son is also having alleged fraud and criminal charges in France. Clearly, the Ugandan President has already known for corruption behavior. Therefore, even a state agency of PPDA has some words, that the government needs strict regulations before procurement and infrastructure development. This will be clearly important when it comes to petroleum industry. Take a look!

PPDA strict regulation on public procurement:

Public procurement is a key pillar of the public financial management system. The country’s budget and plans are translated into actual services to our people through the public procurement system. It is also the link between the public sector and the private sector as it is the medium through which the private sector does business with Government. Public procurement therefore involves large sums of money and as our budget grows with the priorities of Government remaining infrastructure development, the proportion of the budget earmarked for public procurement remains significant and therefore calls for strict regulation” (PPDA, 2017).

Audits and investigations by the Public Procurement and Disposal of Assets indicate that corruption in the procurement process manifests more in the evaluation of bids, reported to be at 58%. PPDA’s Manager Capacity Building Ronald Tumuhairwe says such corrupt practices lead to awarding of contracts to incompetent individuals hence shoddy works in several government projects” (…) “He adds that the second process where corruption manifests is awarding of contracts at 12.5%, followed by receipt and opening of bids, reviewing evaluation of bids, advertising and signing of contracts” (Sebunya, 2017).

President Museveni clearly has own agencies saying it is important with strict regulations on procurement and infrastructure developments like the ones needed for oil industry in the republic. The regulation of oil industry is lax, to make sure the state isn’t transparent with its profits and taxation of the industry. This is what Museveni wants, that the state and the public doesn’t know the contracts or the agreements between the parties involved. That is something President Obiang surely have the capacity to teach Museveni. And how to make sure his family is earning from the state resource, instead of the public and the state itself. Peace.

Reference:

Transparency International – ‘ON TRIAL FOR CORRUPTION: FRENCH PROSECUTORS DEMAND JAIL TERM AND €30 MILLION FINE FOR OBIANG’ (11.07.2017) link: https://www.transparency.org/news/feature/on_trial_for_corruption_french_prosecutors_demand_jail_term_and_30_million

Santander Trade – ‘EQUATORIAL GUINEA: FOREIGN INVESTMENT’ (August 2017) link: https://en.portal.santandertrade.com/establish-overseas/equatorial-guinea/investing-3

Sebunya, Wycliffe – ‘Corruption manifests most in the procurement process – IG’ (25.08.2017) link:http://radioonefm90.com/corruption-manifests-most-in-the-procurement-process-ig/

PPDA – ‘EVALUATING INNOVATIVE ANTI CORRUPTION POLICIES IN PUBLIC PROCUREMENT IN UGANDA’ (02.08.2017) link: https://www.ppda.go.ug/evaluating-innovative-anti-corruption-policies-in-public-procurement-in-uganda/

U.S. Treasury fines ExxonMobile meager $2m for violation of the Russian-Ukraine Sanctions!

Some days you wonder if the connections of the New York isn’t to strong for the moment. When the joys of their loot and their power is not making them lose their senses. The common sense is clearly gone, as the company formerly run by Rex Tillerson, the now State Secretary of United States. Who couldn’t care less about the relationship between the United States of America and the Russian Federation. As the illegal and not internationally accepted annexation of the Crimea from the Republic of Ukraine happen. Still, even as that was happening the former Standard Oil baby ExxonMobile decided to be a trading partner and create opportunities in the vast resources in Russia and Russian territories. Now today they we’re fined, but that was a little slap on their wrist, as the real wealth inside the deal shows how much they really could have earned. Therefore, the crime and the penalty doesn’t fit. The Company gets away with a heist, but has to pay small interests for doing so. Now they are waiting for the possible time for their giant payoff and this will be simple write-off in their results in the next quarterly estimates. This sort of fine isn’t that serious, as it can easily chop it off and continue to eat.

First we will look into what the Wall Street Journal wrote about the deal between Russia and ExxonMobile, the second and third are about today’s fine and you see why it insulting fine to give.

A U.S. official said the new penalties would affect Exxon’s current drilling in the icy Kara Sea with its Kremlin-controlled partner, OAO Rosneft, though the extent of the impact was unclear Thursday. No other Western energy company has as much direct exposure to Russia as Exxon, thanks to a $3.2 billion deal giving the company access to a swath of the Arctic larger than Texas that could hold the equivalent of billions of barrels of oil and gas. Officials in Europe, which has extensive trade links to Russia, have insisted that Western nations share the fallout from sanctions against Moscow. Russia has said it would retaliate against additional sanctions with measures of its own, further heightening the risks to companies operating there, legal experts said. Exxon is “assessing the sanctions,” said Alan Jeffers, a company spokesman. “It’s our policy to comply with all laws.” (Gilbert, 2014)

ExxonMobil Corporation Assessed a Penalty for Violating the Ukraine-Related Sanctions Regulations: ExxonMobil Corp., oflrving, Texas, including its U.S. subsidiaries ExxonMobil Development Company and ExxonMobil Oil Corp. (collectively, “ExxonMobil”), has been assessed a civil monetary penalty of $2,000,000 for violations of the Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589 (Ukraine-Related Sanctions Regulations). Between on or about May 14, 2014 and on or about May 23, 2014, ExxonMobil violated§ 589.201 of the Ukraine Related Sanctions Regulations when the presidents of its U.S. subsidiaries dealt in services of an individual whose property and interests in property were blocked, namely, by signing eight legal documents related to oil and gas projects in Russia with Igor Sechin, the President of Rosneft OAO, 1 and an individual identified on OF AC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”) (referred to hereinafter as an “SDN”)” (U.S. Treasury, 20.07.2017).

OF AC considered the following to be aggravating factors: (1) ExxonMobil demonstrated reckless disregard for U.S. sanctions requirements when it failed to consider warning signs associated with dealing in the blocked services of an SDN; (2) ExxonMobil’s senior-most executives knew of Sechin’ s status as an SDN when they dealt in the blocked services of Sechin; (3) ExxonMobil caused significant harm to the Ukraine-related sanctions program objectives by engaging the services of an SDN designated on the basis that he is an official of the Government of the Russian Federation contributing to the crisis in Ukraine; and (4) ExxonMobil is a sophisticated and experienced oil and gas company that has global operations and routinely deals in goods, services, and technology subject to U.S economic sanctions and U.S. export controls” (U.S. Treasury, 20.07.2017).

So it’s okay, the company ExxonMobile was fined for intervening in a Republic and inside a state where there was clear sanctions against trade. That was something Rex Tillerson knew and also the Russian counterparts, but ExxonMobile didn’t care. They just wanted the profits and earn on the fragile arctic and also into areas like the annexed Crimea. This shows the intent of profiting while being under sanctions and not respecting the laws of the United States and being a registered company residing in the United States.

This show the ethical backdrop of the New York Gang and the Administration of today, we cannot know how much the company earned before the stop between Rosneft and ExxonMobile. The suspension of activity between them. What we can imagine is that it was vastly more than the little they paid for breaking the law. Peace.

Reference:

Gilbert, Daniel – ‘Sanctions Over Ukraine Put Exxon at Risk’ (11.09.2014) – Wall Street Journal

OAG Muwanga explains in two reports problems and errors within the Petroleum Industry!

The Auditor General has two reports on the Petroleum Industry and the issues of Petroleum Data and the Petroleum Fund. The errors of the state, the PAYE of the tax to URA. Proves that the monies earmarked for the Petroleum Fund, ends up in the Consolidation Fund. This is proof of the problematic use of the added taxes before the oil adventure really takes off and the drilling of the explored blocks in the Lake Albertine Basin. Where already different international companies have come to drill and the state is making a petroleum pipeline to Port Tanga in Tanzania. Therefore, these vast resources and possible taxes created by the industry and within the Republic. Still, the default problems that the Auditor General address can be fixed. It is just a matter of morals and actually following guidelines. Some are even set in the Public Finance and Management Act of 2015, so if for instance URA follows it, the problems of transactions into wrong fund can create payment arrears and also future problem of spending by the state. Since the misuse of funds and taxes can be allocated to other than what they was expected, as the Consolidation Fund has other uses than the Petroleum Fund. Just take a look!

Petroleum Fund:

For the six months ending December 31, 2016, the Fund received non tax revenue worth UGX 922,348,854 (USD270,900) as surface rental fees from Tullow Uganda Operations Pty and Total E & P Uganda” (OAG, P: 7, 2017).

It was however noted that monies collected by Uganda Revenue Authority (URA) under the income tax on income derived from petroleum operations such as PAYE, VAT and WHT is not being remitted to the Uganda Petroleum Fund. This contravenes the Public Finance and Management Act 2015” (…) “In their opinion PAYE is not tax charged on income derived from petroleum operations but paid by the employees and as such it had been excluded from the definitions of petroleum revenues. Arising out of the above it was established that UGX.l1,390,530,053 collected through the commercial banks and remitted to the consolidated fund should have instead been transferred to the Petroleum Fund. Management has promised to remit it to the Petroleum Fund before closure of the financial year 2016/17” (OAG, P: 10, 2017).

During the period under review, the fund received USD 270,900 (Two hundred seventy thousand, nine hundred dollars) in respect of surface area rentals consisting of USD 113,400 (One hundred thirteen thousand, four hundred dollars) paid by Total E& P Uganda for the development areas of Ngiri, Jobi-Rii and Gunya and USD 157,500 was paid by Tullow Uganda Operations Pty Ltd for development areas of soga, gege, Kasemene, Wahrindi, Nzizi-Mputa & Waraga, and Kigogole- Ngara Unrealised foreign exchange gains worth UGX 15,093,435,449 have been recognised in the Statement of Changes in Equity. These arose from translating the USD opening balances and revenue collected during the period into UGX at the closing rate for reporting purposes” (OAG, P: 14, 2017).

Petroleum Data:

The oil companies did not fully comply with submission of reports relating to their drilling, exploration activities and operations as required. Delays and non-submission of reports results in an incomplete database which may reduce the effective use of the database in petroleum resource management” (OAG, P: vi, 2016). “The shortcomings in the management of petroleum data by the Ministry of Energy and Mineral Development may affect the completeness of the data on the existing petroleum potential, extent of reserves, and amount recoverable thus reducing Uganda’s ability to maximally exploit and benefit from its oil and gas resource potential. A thorough understanding of the resource base and its geographical distribution informs key decisions on the rate of exploitation and potential future revenues” (OAG, P: viii, 2016).

This should all be worrying that the State and the Industry isn’t sufficiently ready for the activity, as the URA cannot even allocate funds correctly. This is even before the Petroleum Data is taken care of and made sure that the exploitation and drilling happens where the best well is within the block. Secondly, the real value of the reports and the licenses that the state would offer to the companies. That because the flow of data and the status of it wouldn’t be where it could be. This is losses created by maladministration and lacking will of institutionalize the knowledge. Instead, the Petroleum Industry is controlled and has just a few handshakes away from the State House. That is why the URA might have delivered the funds to the Consolidation Fund instead of the Petroleum Fund. All of the potential might be wasted in the lack of protocol and care of resources management that is needed in the Ministry of Energy and Mineral Development (MoEMD).

The recommendations and the looks into the issues should be taken serious by the Petroleum Industry and the MoEMD. So the state could both earn more on the industry and also create more positive growth through the provisions that is already made in Public Finance Management Act (PFMA) 2015. So time will tell if they will be more reckless, if they will listen to the OAG or if the Presidential Handshakes will steal it all for keeping the NRM cronyism at bay. Peace.

Reference:

Office of the Auditor General Uganda – ‘REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE PETROLEUM FUND FOR THE SIX MONTH PERIOD ENDED 31sT DECEMBER 2016’ (07.06.2017) – John F.S. Muwanga

Office of the Auditor General Uganda – ‘Management of Petroleum Data by the Ministry of Energy and Mineral Development’ (December 2016) – John F.S. Muwanga

Ugandan economy could get Oil-Shocks due to external factors, recent BoU report claims!

Surprise, surprise the Bank of Uganda (BoU) has made a working paper on the possible consequences of the oil price, the oil exports and the oil imports on the Ugandan economy. This didn’t exceed my expectation of a report or paper, but said enough to clearly anticipate changes in the economy with the coming export. Even as the BoU called the domestic oil production in embryonic stages, which means the real impact will come when it is closer petroleum production the GDP and CPI feel more impact of the oil prices and the volumes exported from the Lake Albert Basin.

That the Ugandan State and the Republic of Uganda, should know that the fresh foreign exchange and currency into the economy, as the domestic parts of petroleum is not having big impact on the economy! Still, the export can change it as the oil prices and change the consumer price index for instance. Take a look!

One such shock that is a source of major concern and risks to monetary policy-making in Uganda is the oil shock. To our knowledge, the effects of oil shocks in Uganda, to date, have not yet been analyzed. The objective of this paper therefore, is to analyze the nature and importance of oil shocks to Uganda’s economy in a dynamic framework” (Nyanzi & Bwire, P: 4, 2017).

According to the Uganda’s Ministry of Energy and Mineral Development (2012), oil provides about 10 percent of Uganda’s energy requirements – the rest is sourced from the small and underdeveloped and unreliable electricity sub-sector and the cheap biomass energy. The oil sector was also deregulated in 1994, under the broad structural reforms implemented by the Government of Uganda, which effectively eliminated oil prices subsidies. Uganda is endowed with commercially-viable oil reserves, but domestic oil production is in embryonic stages. Consequently, all of the oil-energy needs of the country are satisfied by imports” (Nyanzi & Bwire, P: 8, 2017).

The results of the variance decomposition in regard to oil shock are not entirely unexpected, given the structure of Uganda’s economy. Oil and its products constitute 8 percent of total intermediate consumption and 10 percent of energy requirements. In addition, oil is crucial to electricity supply in Uganda because hydro-electricity is unreliable and insufficient. This implies little or no substitutability of oil with hydro-electric energy in production in case of adverse oil shock, which could justify the long-run 20 percent variance in output due to oil shocks. Regarding consumer prices, the small percentage of variance in consumer prices due to oil shocks is justified by the small weight of oil in the CPI basket. Oil constitutes about 1 percent in the 2009/10 rebased CPI basket, of which 0.8 percent is oil for personal transportation and 0.2 percent a source of liquefied energy at home. These numbers are not surprising given that over 75 percent of the population live in rural areas and depend mainly on wood and charcoal as a source of energy, and that rates of car ownership are generally low. Moreover, the main source of short-run volatility in the Uganda CPI is weather-related factors affecting food prices. This leaves the bulk of fluctuations in the core consumer prices (Comprising over 80 percent) explained by demand” (Nyanzi & Bwire, P: 18, 2017).

Oil shocks are transmitted through the supply channel, as a shock that increases the international price of oil leads to opposite movements in real output and consumer prices in Uganda” (Nyanzi & Bwire, P: 19, 2017).

It is hard to say how it could impact and how the petroleum production and exports will change the economy, how the prices and the inflation, as the measure of how much the price of the crude-oil will be at the given time. That the government has secret agreements with oil companies and also agreements with other to build the crude-oil pipeline that goes to Tanzania. Therefore, the reaction in the economy is not yet known, but with the background and knowledge of the how it is now. Most likely a real output and change in consumer prices in Uganda.

That will be an oil-shock no-one can be prepared for. Unless the Government and Parliament created legislation and policies who might soften the change of the economy. Therefore, with this in mind, the National Resistance Movement, the State House and the President Museveni have work to do. That is if they consider the implication the petroleum production and exports will have on inflation, currency value and consumer prices index as well. This report should open some eyes into it, but it should not be surprising. Peace.

Reference:

Nyanzi, Sulaiman & Bwire, Thomas – ‘Working Paper No. 04/2017 – The Macroeconomic responses to Petro Shocks for Uganda’ (May, 2017)

A look into Donald Trump’s possible nominee for Secretary of State: Rex Tillerson, what has he said and done?

tillerman-putin-award

“Whether I choose him or not for “State”- Rex Tillerson, the Chairman & CEO of ExxonMobil, is a world class player and dealmaker. Stay tuned!” – Donald J. Trump on Twitter 11.12.2016.

We have to scrutinize and look over the men that possibly will be the most powerful men and woman in the Trump Administration, as they should not be forgotten what they did in the past. Especially when Trump himself has branded Obama Administration as ‘hopeless’ and ‘bad’; therefore his Administration should be better, though by the men and woman who is already picked his stature for military and rich-men is staggering, more than the qualifications for each role in Government. That is what is worrying. This time around it is the current Chairman of ExxonMobile, a negotiator and deal-maker for the grand-oil empire from Texas, the Rex Tillerson who is connected in Venezuela, Russia and Kazakhstan. He is the next in line for the possible task of Secretary of State!

“If you ask the average person on the street about U.S. energy and U.S. oil in particular, our situation, most Americans would say, ‘Oh, we’re energy poor; we don’t have enough oil; we don’t have enough natural gas.’” – Rex Tillerman

What he even wished to happen inside the US in the midst of the Obama Administration:

“Q: President Obama has outlined a plan to cut oil imports by one-third over the next 10 years. Is this feasible?

A: We expect gasoline demand in the U.S. to decline about 17% over the next 20 years. And that’s a function of both efficiency standards that have been put in place for automobiles, but also an ongoing penetration of hybrid and hybrid-electric vehicles. There’s going to be a natural decline in demand for motor fuels from that. That will be partially offset by increasing demand for heavy-duty fuels like diesel. That, along with the penetration of bio fuels, is going to result in a mitigation of imports. Whether we eliminate a third of the imports is hard to say. Another piece of our success will rest on whether the U.S. government decides to make available the lands that it controls, because 60% of the remaining oil resource in the U.S. is on federal lands and 40% of the remaining gas resource. It’s up to the federal government to allow the industry to explore those lands and develop those resources that could have a big impact on supply in the future” (Bartiromo, 2011).

Secretary of State does: “The Secretary of State, appointed by the President with the advice and consent of the Senate, is the President’s chief foreign affairs adviser. The Secretary carries out the President’s foreign policies through the State Department, which includes the Foreign Service, Civil Service, and U.S. Agency for International Development” (Secretary of State, link: http://www.state.gov/secretary/).

So as the foreign affairs job has lots of responsibility to be the face of the nation when the President self cannot travel or negotiate, even do diplomatic missions to keep up with alliances and treaties that the US Government have or currently in the works. So the position should be done by somebody with tact and courtesy for the will of the US Government and the foreign dignitaries so that the person doesn’t offend either party while working for the common good. That is something that the possible former ExxonMobile chairman Tillerson has to do.

jeff-simon-exxon

Negotiations in Venezuela:

“According to the XM executives, the last significant contact XM had with the BRV or PDVSA was XM Chairman and CEO Rex Tillerson’s May 16 meeting with Ambassador Bernardo Alvarez. During the meeting, Tillerson told Alvarez that XM must have a confidentiality agreement before it could begin negotiations on the remaining migration issues. In addition, he stated book value was not an acceptable basis for compensation for lost value. Finally, Tillerson said XM was looking for a win-win solution but warned that XM was willing to go to arbitration if it had to do so. The executives later mentioned that PDVSA’s stake in the Chalmette refinery was mentioned as a possible component in a compensation package. They did not specify who raised the topic” (…) “When asked if other IOCs had entered into negotiations with the BRV, XM executives replied they did not believe any companies had entered into meaningful negotiations. They stated they met with Total executives on May 22 to discuss the general situation. The Total executives stated their company has also rejected book value as a basis for compensation for lost value. In addition, they told the XM executives they believe the Sincor strategic association will be hit with a large tax assessment in the near future. Seniat, the BRV tax authority, presented CP and Chevron earlier this month with tax bills for close to USD 550 million for back taxes for the Petrozuata and Hamaca strategic associations for the years 2003 to 2005” (WikiLeaks, 2007).

In 2008 – Trading oil in Kazakstan:

“(Note: The one exception was a threat by President Nazarbayev in a December meeting with Tillerson’s deputy to use the subsoil legislation. Nazarbayev, however, reverted to his previous public line when he reassured the Ambassador privately the next day that the legislation would not/not be used against any existing contract. End Note.) In the end, both ExxonMobil and ConocoPhilips confirmed that the GOK used tough, but legitimate business pressures to pursue their case” (…) “ExxonMobil told us that CEO Rex Tillerson had decided that Exxon was going to hold the line on this issue. However, all our sources indidated that Tillerson was subjected to very strong pressure in the final negotiations, both by the other CEOs and by the Kazakhstani side. According to our in-country ExxonMobil contact (who was not in the meetings but who was extensively debriefed about them), it was the lure of future business in Kazakhstan that eventually led Tillerson to reverse course, and to agree to a “below market price” figure of $1.8 billion as the valuation of KMG’s increased share. (Note: Determining the “market price” for this share is essentially impossible, as different financial models will yield wildly varying results depending on the assumptions used. That said, all parties involved agree that $1.8 billion is a “below market price,” even if they can not tell you how much below market. End Note.)” (WikiLeaks, 2008). In 2011: “0100 Kazakh President Nursultan Nazarbayev meets Rex Tillerson, the CEO of ExxonMobile corporation, and Dhimitrios Khristofias, the  president of Cyprus, within the framework of his visit to New York to  attend 66th session of the UN General Assembly. Video shows meetings;  Rex Tillerson and Dhimitrios Khristofias, speaking to camera” (WikiLeaks, 2011).

“Experience tells us that a good foundation is critical for success in the Arctic and elsewhere. ExxonMobil’s Sakhalin-1 project with Rosneft is an example where we have put this experience to work.” – Rex Tillerson

On Russia:

“Tillerson said he valued the efforts of the Russian government to improve the tax regime and that it would have a positive effect on Russian and foreign investors.The moves will help expand cooperation in the complex situation in Russia, he said. Tillerson said he was encouraged to see Russia move to create a competitive environment, taking into account the experiences of other tax regimes in other countries” (WikiLeaks, 2011). “Prime Minister Vladimir Putin yesterday put the total of direct  investment in joint projects by Rosneft and ExxonMobil at 200-300  billion dollars, but “if we are talking about infrastructure, the construction of the necessary buildings, and surface facilities, the  investment could reach 500 billion dollars”. However, ExxonMobil expects  its agreement with Rosneft to encourage the Russian authorities to ease the tax regime for the industry. “Such steps will help the government to  expand cooperation in the difficult situation that is taking shape in  Russia,” the head of ExxonMobil, Rex Tillerson, explained” (WikiLeaks, 2011).

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On Fracking:

Exxon CEO Rex Tillerson speaking at a January 2010 congressional hearing concerning the $41 billion merger of Exxon with XTO Energy (one of the worlda**s biggest natural gas drilling companies), said he could support revealing toxic frack mixes. He added that, by combining the hydraulic fracturing and horizontal drilling processes a**we can now find and produce unconventional natural gas supplies miles below the surface in a safe, efficient and environmentally responsible manner.a** Exxon has threatened to nix its XTO acquisition if Congress makes fracking a**illegal or commercially impractical.a**” (WikiLeaks, 2010).

Article about Tillerson faith in Global Warming:

“They’re clearly cognizant of global warming – they employ some of the world’s best scientists, after all, and they’re bidding on all those oil leases made possible by the staggering melt of Arctic ice. And yet they relentlessly search for more hydrocarbons – in early March, Exxon CEO Rex Tillerson told Wall Street analysts that the company plans to spend $37 billion a year through 2016 (about $100 million a day) searching for yet more oil and gas.

There’s not a more reckless man on the planet than Tillerson. Late last month, on the same day the Colorado fires reached their height, he told a New York audience that global warming is real, but dismissed it as an “engineering problem” that has “engineering solutions.” Such as?” (Bill McKibben – ‘Global Warming’s Terrifying New Math’ 09.07.2012).

David Fenton sent an E-Mail titled: “Murdoch climate campaign” on the 19.02.2015 to Clinton Campaign Manager John Podesta that said: “Hi again. Here is the plan to go after WSJ and FOX on climate. I have 500,000 of this pledged if I can raise another million. It’s a real pledge from Graeme Wood in Australia. I sure hope something like this can happen it’s long overdue. Thanks again, David”. This E-Mail had an attachment where this we’re said:

“1)       A climate science ad series (surprisingly affordable) on the Wall Street Journal’s opinion page, sponsored by a mainstream institution like Columbia University’s Earth Institute or the Union of Concerned Scientists.  These would be unassailably factual and scientific but also compelling, memorable and clear. They would show the facts the Journal denies — Co2 from fossil fuels traps heat, the earth has warmed, the CEO of EXXON believes it why not this paper? This series would stress consequences for the economy and mainstream support from groups like the World Bank, International Energy Agency, PWC, NAS, the Royal Society, etc. Of course the Journal would attack the series in editorials, which will help it get more attention” (WikiLeaks, 2015).

This here shows some of the stories of the man in the past, Rex Tillerson who has apparently massive faith in fracking and negotiation with Putin for the business he was running ExxonMobile. The WikiLeaks stories are special in themselves, but there other lost tales that needs to show the character of the man.

Like the Kurdistan adventure:

“Exxon Mobil Chief Executive Rex Tillerson refused Tuesday to answer questions about a controversial deal the oil company has signed with the Kurdish government in northern Iraq” (…) “Exxon, (XOM, Fortune 500) which holds big contracts with the Iraqi government to develop oil fields in the southern part of the country, was sharply criticized by Iraqi government ministers last month over the deal. The Iraqis suggested Exxon might be sanctioned over the move, possibly putting their deals in the southern part of the country in jeopardy” (…) “Iraqis in Baghdad are loathe to see oil companies sign separate deals with the semi-autonomous government in the Kurdish north, preferring instead that all deals go though the central government” (Hargreaves, 2011). So the next Secretary of State is ruthless in trade for fortunes that he picked deals with Kurdistan government over the Southern Iraqi Central Government that counters the diplomatic way that the governments do with Iraq. So Rex Tillerman could surely do the same in charge of the State Department under the Trump Administration.

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Here is a story in the inner workings in Chad:

“There was Exxon’s meddling in a 2006 standoff between Idriss Déby, the authoritarian leader of Chad — a Central African country with rich oil reserves — and Paul Wolfowitz, then the leader of the World Bank. Déby wanted weapons to fight rebels supported by nearby Sudan, but good-governance clauses in loans Chad had received from the World Bank restricted the country’s ability to purchase arms. Wolfowitz was ready to freeze some of Sudan’s bank accounts, prompting Déby to threaten to effectively kick Exxon out of Chad. That could have cost the company billions of dollars. So Exxon lobbied the U.S. ambassador to Chad to fix the problem, which led to Déby getting his weapons and Exxon its oil” (…) “By now ExxonMobil had made its own choice clear,” Coll writes. “It was more interested in the survival of Chad’s oil production than it was in the World Bank’s experiment in nation building.” (Walsh, 2012). So he would use World Bank loans to trade weapons to make sure that the ExxonMobil get the possibility to the Oil Reserves in Chad. That proves how far the man will go for profit, that the authoritarian leaders needs for arms can be meet, if he get the oil as long as he makes a killing.

Than you have the story of how he worked in Guyana:

“US oil giant ExxonMobil made waves in Guyana last Thursday by announcing it had confirmed a “world-class discovery” of oil offshore. The company said results from its exploration well in the Stabroek block, about 120 miles (193 kilometres) offshore Guyana, found between 800 million and 1.4 billion oil-equivalent barrels” (…) “The waters around Guyana are largely unexplored. According to a Forbes story quoting Exxon CEO Rex Tillerson, the 3-D seismic survey that Exxon conducted in the area was its largest in history — “the equivalent of 1,400 Gulf of Mexico blocks” (…) “In November 2015, Guyana’s government faced accusations that the state didn’t have the capacity to independently monitor ExxonMobil’s compliance with environmental regulations. The worry arose after it was alleged that ExxonMobil was promoting and funding climate change denials” (Abdelwahab, 2016).

So now that he is peculiar connected into the oil developments outside Guyana, as it was profitable for the company without considering the environment of the ocean and the sea as the we’re even paying climate change deniers in Guyana. That the billions of barrel is more important that the effect that oil drilling will have on the nation.

This from the guy that are key part of the former Standard Oil companies that we’re re-merged from Exxon and Mobil Oil Companies, that we’re too powerful in the United States. The US Company now are now so big Multi-National that they can secure the World Bank to fund Chad Government loans so they can buy weapons, and exchange give possible oil fields to the ExxonMobil. If that doesn’t say anything nothing does. This sort of fellow will now run the Secretary of State, not to talk about the Foreign Affairs of the United States. The diplomatic correspondence and according to due procedure of the Trump Administration; that will be interesting as the CEO Tillerman has been focused on profits and not on anything else. We can wonder what will be his Modus Operandi as a Secretary of State, what his policies and foreign affairs chief under Trump. Peace.

Reference:

Abdelwahab, Alex – ‘ExxonMobil’s significant oil find off Guyana leads to questions about the country’s future’ (05.07.2016) link: http://www.caribbeannewsnow.com/headline-ExxonMobil’s-significant-oil-find-off-Guyana-leads-to-questions-about-the-country’s-future-30969.html

Bartiriromo, Maria – ‘ExxonMobil CEO: Open more federal land for oil and gas’ (18.04.2011) link: http://usatoday30.usatoday.com/money/companies/management/bartiromo/2011-04-18-bartiromo-rex-tillerson-exxonmobil.htm

Hargreaves, Steve – ‘Exxon silent on controversial Iraq oil deal’ (06.12.2011) link: http://money.cnn.com/2011/12/06/news/international/Exxon_Iraq_oil_deal/

Walsh, Bryan – ‘Inside the Death Star — Also Known as Exxon’ (01.05.2012) link: http://content.time.com/time/health/article/0,8599,2113546,00.html

Wikileaks –‘KAZAKHSTAN: ALL SIDES SMILING WITH KASHAGAN DEAL’ (18.01.2008) link: https://wikileaks.org/plusd/cables/08ASTANA91_a.html

WikiLeaks – ‘FAJA NEGOTIATIONS: NO NEWS IS BAD NEWS’ (25.05.2007) link: https://wikileaks.org/plusd/cables/07CARACAS1030_a.html

WikiLeaks – ‘KAZAKHSTAN/CYPRUS/UK – Programme summary of Kazakh Khabar TV “Zhanalyqtar” news 1400 gmt 21 Sep 11’ (21.09.2011) link: https://wikileaks.org/gifiles/docs/71/711052_kazakhstan-cyprus-uk-programme-summary-of-kazakh-khabar-tv.html

WikiLeaks – ‘RUSSIA/FORMER SOVIET UNION-Exxonmobil Hails Russian Government Efforts to Improve Tax System’ (31.08.2011) link: https://wikileaks.org/gifiles/docs/25/2574477_russia-former-soviet-union-exxonmobil-hails-russian.html

WikiLeaks – ‘Murdoch climate campaign’ (19.02.2015) link: https://wikileaks.org/podesta-emails/emailid/27241

WikiLeaks – ‘Re: FRACK – W.Va. eyes fluid disclosure; quote from Lachelt’ (09.03.2010) link: https://wikileaks.org/gifiles/docs/38/386876_re-frack-w-va-eyes-fluid-disclosure-quote-from-lachelt-.html

WikiLeaks – ‘RUSSIA/CANADA/MEXICO – Russia’s oil firm signs partnership deal with ExxonMobil’ (02.09.2011) link: https://wikileaks.org/gifiles/docs/70/705223_russia-canada-mexico-russia-s-oil-firm-signs-partnership.html

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