30th March 2011
British-based oil explorer Tullow Oil has agreed to sell stakes in its Ugandan operations to France's Total and China's CNOOC for $2,9-billion, bringing in big partners to develop the oil fields.
Tullow said on Wednesday it agreed to sell each company a one third interest in fields around Lake Albert, which Tullow estimates to contain 1-billion barrels of oil, and potentially as much as 3,5-billion barrels. Tullow will retain a third share.
The deal leaves unresolved a massive tax dispute with the government. Uganda's Energy Minster Hilary Onek said the country would receive a total of $472-million in taxes from the farmdown deal.
Tullow, however, said this figure was calculated incorrectly and that it believes the total liability to be "significantly less" than the $141-million it has agreed to deposit with the government pending discussions on the matter.
Additionally, Tullow, Total and Cnooc have agreed to deposit $313-million with the government while Uganda pursues Heritage Oil, Tullow's former partner in the fields, for $404-million in taxes the government says is due on the sale of its interests to Tullow.
Tullow said it expected this money would be repaid but it was unclear if the companies will receive any interest on the deposit while the Heritage dispute rumbles on.
Tullow said up to $10-billion will be spent on new drilling and the construction of a small refinery and a pipeline to the East African coast for exports to world markets.
Tullow said it expected production of around 20 000 barrels per day for the local market by 2015 and full scale production, possibly in excess of 200,000 bpd, after this date.
Tullow shares traded down 0,4% at 07:20 GMT, against a 0,6% rise in the STOXX Europe 600 Oil and Gas index. Total traded up 0,7% and Cnooc traded up 2%.
Edited by: Reuters