CNOOC, Total to buy stakes in Uganda from Tullow

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Mar. 30 -- Tullow Oil PLC plans to sell stakes in Ugandan exploration areas to Total SA and CNOOC Ltd. for $2.9 billion total, and pending approval from the Ugandan government, the transactions mark another step toward a long-awaited $10 billion development for oil production in Uganda.

Tullow expects to complete the transaction, also subject to regulatory approvals by China officials, within the first half of 2011. After closing, Tullow, CNOOC, and Total each will hold one-third interest in Exploration Areas 1, 2, and 3A in Uganda.

The government of Uganda will determine which company operates each exploration area. Initially, Tullow will act as interim operator in all three exploration areas.

The sale to Total and CNOOC was in negotiations for more than a year pending resolution with a capital gains tax dispute between the Ugandan government, Heritage Oil Corp., and Tullow. Last year, Heritage sold its interest in the proposed development area to Tullow, its former partner in the Lake Albert Rift basin.

The Mar. 30 announcement follows a memorandum of understanding between Total and the Ugandan government. The Mar. 15 MOU separated Tullow from the Heritage tax dispute, allowing Tullow to proceed with selling part of its stake to CNOOC and Total.

The next step is for Tullow to make certain tax-related payments to the government of Uganda. Under the MOU, Tullow and partners were granted new licenses over EA-1 and an onshore area of EA-3A. The MOU also confirmed the partnership’s rights to develop Kingfisher field where Tullow said it has targeted oil production of 200,000 b/d by around 2015.

“In addition, a new 6-month license over the Kanywataba (previously Sunbird) prospect in EA-3A will be awarded to Tullow, CNOOC, and Total under similar license terms to the EA-3A license,” Tullow said. “The remainder of the EA-3A license has been relinquished, and the partnership has the right to apply for a new license over this area.”

Contact Paula Dittrick at paulad@ogjonline.com.



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