By Moses Ekunu
The global energy transition has fundamentally altered the way nations approach oil and gas investments. While much of the focus has been on financing and production, one critical issue remains largely overlooked – Decommissioning. For East Africa, failure to proactively plan for the decommissioning of oil and gas facilities could pose a significant financial, environmental and reputational risk.
Despite ambitious plans to develop petroleum resources, the region’s current decommissioning legislation, just like it is the case in most parts of the world, is insufficient and does not align with the realities of the fast-changing energy landscape. If we do not act now, we may find ourselves grappling with thousands of abandoned wells and facilities, placing the financial burden of cleanup on taxpayers.
The Hidden Time Bomb in Our Oil and Gas Sector
The challenge lies in when and how decommissioning is planned. A review of decommissioning legislation in Uganda, Kenya, Tanzania, South Sudan, Rwanda, and Ghana reveals that decommissioning plans and activities typically begin at the end of a project’s life cycle. Additionally, contributions to decommissioning funds are structured to start mid-project—an approach that might have worked in a stable petroleum environment but is increasingly inadequate in light of the realities of the energy transition today.
The global push for rapid decarbonisation, coupled with activist-driven efforts to phase out oil and gas, means that some projects could end much earlier than originally anticipated. If financial provisions for decommissioning are only made midway or at the end of a project, what happens when the project shuts down prematurely?
This risk presents a ticking time bomb for East Africa. Without early decommissioning plans in place, we risk being caught off guard—forced to deal with abandoned wells, environmental degradation, and massive financial liabilities.
Canada and the United States provide stark examples of the consequences of poor decommissioning planning. Canada is grappling with over 5,000 orphaned oil and gas facilities, forcing the government to introduce an Orphan Fund Levy to cover decommissioning costs for sites without responsible operators. Similarly, the United States had to allocate US$4.7 billion under the Bipartisan Infrastructure Law to plug abandoned oil and gas wells after operators failed to fulfil their obligations. These cases highlight the urgent need for proactive decommissioning policies to prevent financial and environmental liabilities.
East Africa cannot afford to repeat these mistakes. We must recognise that a poorly planned decommissioning framework has real consequences, from environmental hazards to economic setbacks. The idea of setting up an orphan fund levy or, worse, having governments finance decommissioning directly from national budgets is one that must be avoided at all costs.
The Opportunity in Decommissioning: A Multi-Billion Dollar Industry
Decommissioning is no longer just a financial burden—it presents a multi-billion-dollar investment opportunity. By 2030, over US$100 billion will be spent on decommissioning oil and gas assets globally, and by 2050, more than US$8 trillion will be invested in decommissioning energy projects including stranded assets. East Africa has the potential to turn this emerging sector into a thriving industry, creating jobs, attracting investment, and positioning itself as a leader in responsible resource management. Regional financial institutions must also recognise the opportunity to manage decommissioning trust funds and offer specialised financing to support this growing industry.
The 11th East African Petroleum Conference and Exhibition (EAPCE), held in the Tanzanian coastal city of Dar-es-Salaam, highlighted the urgent need to reform decommissioning policies across East African Community (EAC) member states. To ensure long-term benefits from the petroleum sector, governments must revise existing laws, mandate early financial contributions to decommissioning funds, and encourage financial institutions to invest in the sector. Additionally, learning from global best practices will help East Africa avoid costly mistakes seen in other oil-producing regions. With the energy transition accelerating, the question is not whether oil and gas will be phased out, but whether the region will be prepared. Acting now will allow East Africa to turn decommissioning into an opportunity rather than a crisis, ensuring economic sustainability, environmental protection, and financial stability.
Moses Ekunu is the Manager, ED’s Office at the Petroleum Authority of Uganda
Email; moses.ekunu@pau.go.ug
