AN ANALYSIS OF THE LAW GOVERNING COST RECOVERY IN UGANDA’S OIL AND GAS SECTOR

Abstract

This study analyzes the law governing cost recovery in Uganda's oil and gas sector, focusing on the efficiency of the Production Sharing Agreements (PSAs) regime. The research examines the benefits and challenges of cost recovery for both the host country and international oil companies, and provides a comparative analysis of different jurisdictions. The study reveals that while the PSAs regime has its benefits, it also has shortcomings, particularly in terms of cost inflations, overstating budgets, and transfer pricing by oil companies. The study uses a mixed research design, combining: Qualitative research examines the "why" and "how" of a phenomenon, providing in-depth understanding and Quantitative research: Seeks empirical support for research hypotheses. Additionally, the researcher used doctrinal and empirical legal research approach. The researcher used statutes, PSAs, academic literature and expert interviews. Analysis used thematic synthesis to extract legal and policy insights.

The researcher Key Findings included that the PSAs regime has benefits for both the host country and international oil companies, Cost recovery is a critical aspect of the PSAs regime, but it can be challenging to implement, the law governing cost recovery in Uganda's oil and gas sector is scattered and not comprehensive. There is need for Uganda to invest in training its citizens to negotiate better contractual terms. The research Recommends that Uganda should invest in training its citizens to negotiate better contractual terms, the government should ensure transparency in the oil and gas sector, the law governing cost recovery should be reviewed to address the shortcomings of the PSAs regime.

The research concludes that Uganda needs to invest in training its citizens to negotiate better contractual terms, monitor and evaluate oil company activities, and ensure transparency in the oil and gas sector.