PIC: Tullow Oil Uganda worker at an oil discovery point in Buliisa district. (File photo)
BUSINESS | OIL
KAMPALA - Tullow Oil is set to exit Uganda by June this year, the UK-based oil and gas company has revealed.
In a trading and operational statement update released on Wednesday, Tullow Oil said the farm-down in the country is on progress as the firm awaits Government's approval of transactions with the other joint venture partner firms in Uganda.
“As previously disclosed, Tullow anticipates that the farm-down with Total and CNOOC (China National Offshore Oil Corporation) will complete in the first half of 2018, with cash payment on completion and payment of deferred consideration for the pre-completion period (including the whole of 2017) being received at this time,” the statement reads.
In oil and gas lingo, farm-down refers to when an exploration company sells its rights over discoveries to other companies, usually those that are bigger. Tullow Oil is a smaller company compared to the likes of ExxonMobil, Total and BP.
“The joint venture partners are also working towards reaching FID (final investment decision) in the first half of 2018, at which point Tullow’s second cash installment from the farm-down will be received. In line with its post-transaction status, Tullow has been reducing its operational footprint in Uganda and is now fully prepared for a non-operated presence only," the statement says.
In the meantime, Tullow Oil Uganda, which opened shop in 2004, says operational activity is continuing as usual.
Tullow Oil Uganda has sold its assets to joint venture partners before. In 2012, Tullow sold 66.66% of its shares and remained with 33.33% stake in the the Exploration Area 2 (EA2) in the Albertine region.
A further 21.57% of shares were sold to Total E and P in January last year. British newspaper The Telegraph reported that this deal was $900m (about sh3.3. trillion).
Tullow Oil first discovered oil on the shores of Lake Albert in 2006. The first oil has been earmarked for 2020.