Minister for Energy and Minerals Irene Muloni display National Oil and Gas Policy for Uganda to Journalists
Uganda is poised to give final approval to Tullow Oil’s $2.9bn sale of stakes in one of Africa’s most promising oil prospects to France’s Total and China’s Cnooc, spurring a project which a tax dispute and corruption allegations have long threatened to derail.
Irene Muloni, the energy minister told the Financial Times that Cnooc and Total’s so-called “farm-in” agreement was close to being finalised.
“We are on the final touches,” Ms Muloni said on the sidelines of a conference in Coventry organised by the Chatham House think-tank on Wednesday.
The Irish explorer, which wants to launch a $10bn investment to develop the east African country’s oilfields, has waited months for final approval of the deal.
Its purchase of fellow explorer Heritage Oil’s Ugandan assets has been dogged by acrimony, with the government demanding $313.5m capital gains tax on the transaction. Tullow is suing Heritage for that amount. Tullow is also seeking local arbitration over the government’s demand for a separate $472m in capital gains tax on the farm-in plan.
Aidan Heavey, Tullow chief executive, was due to meet President Museveni in Kampala on Thursday, but senior Tullow executives told the FT they did not expect a deal to be signed at the meeting.
“We might have some more reassurance tomorrow with respect to when that [signing the deal] is going to happen,” said a senior Tullow official.
Last year, Tullow announced plans to sell Cnooc and Total one-third each of its Ugandan assets for $2.9bn, retaining the remaining third of the equity itself. The venture lies in the Lake Albert basin on the border with the Democratic Republic of Congo.
State-owned Cnooc’s involvement in Uganda advances Chinese groups’ thrust into Africa, where they have secured energy resources to feed breakneck growth back home.
Government is preparing legislation to govern exploration and production, pipelines and the management of oil revenues. Mismanagement of oil wealth has sowed discord and graft in many African nations.
“By the end of the year all these bills will be before parliament,” Ms Muloni said. Once the new laws are approved, Uganda will invite further exploration bids, she added, saying there had already been “significant interest from companies worldwide in the new acreage”.
She said the government expected new exploration to boost reserves, officially estimated at more than 2.5bn barrels, about 1bn on which are recoverable.
Financial Times