After almost sixteen (16) years in Uganda, Tullow Oil has announced it has received the final approval from the Ugandan government for its farm down to Total E&P.
The issued statement by the Anglo – Irish company means it is exiting the East African country after several years of operation. The statement said this comes after “executing a binding tax agreement that reflects the pre-agreed principles on the tax treatment of the sale of Tullow’s Ugandan assets to Total” with the Uganda Revenue Authority (URA).
The Ugandan government will make only Shs54.6 billion (about $14.6m) on the transaction, in contrast to the Shs317 billion (about $85m) that Tullow initially offered because part of the money was going to be re-invested in the development phase. A proposal that the government did not agree to then, but insisted on receiving Shs624.5 billion (about $167 million).
Upon completion of the transaction, Total is to pay the company Shs1.8 trillion ($500m) and another Shs280b ($75m) paid whenever government and the oil companies (Total E&P and CNOOC) reach a Final Investment Decision (FID). Tullow will also receive contingent payments linked to the oil price, which is payable after production begins.
French Total E&P will hold the majority stake with 66.7%, and CNOOC will remain with its 33% after the Chinese firm declined to exercise its pre-emptive rights which would have seen it acquire half of the Tullow shares.
The company said the Energy Minister of Uganda, Goretti Kituttu had approved the transfer of operatorship for Block 2 in Buliisa, east of Lake Albert. It read, “With all the government-related conditions to closing having been satisfied, Tullow expects the transaction to close in the coming days after completing certain customary pre-closing steps with Total.”
The new arrangement will also allow the commencement of negotiations on the shareholders’ agreement for the proposed East African Crude Oil Pipeline (EACOP) that will transfer crude from Hoima, Uganda, to Tanga, Tanzania.
The current working structure is that both Total E&P and CNOOC each takes 37.5% stake; Uganda, through the National Pipeline Company takes 15%; and Tanzania through its national oil company – Tanzania Petroleum Development Corporation (TPDC), takes a 5% stake
%20years%20in%20strongUganda/strong,%20strongTullow%20Oil/strong%20has%20announced%20it%20has%20received%20the%20final%20approval%20from%20the%20Ugandan%20government%20for%20its%20farm%20down%20to%20strongTotal%20E&P/strong.The%20issued%20statement%20by%20the%20Anglo%20-%20Irish%20company%20means%20it%20is%20exiting%20the%20East%20African%20country%20after%20several%20years%20of%20operation.%20The%20statement%20said%20this%20comes%20after%20emexecuting%20a%20binding%20tax%20agreement%20that%20reflects%20the%20pre-agreed%20principles%20on%20the%20tax%20treatment%20of%20the%20sale%20of%20Tullow’s%20Ugandan%20assets%20to%20Total”/em%20with%20the%20Uganda%20Revenue%20Authority%20(URA).The%20Ugandan%20government%20will%20make%20only%20Shs54.6%20billion%20(about%20$14.6m)%20on%20the%20transaction,%20in%20contrast%20to%20the%20Shs317%20billion%20(about%20$85m)%20that%20strongTullow/strong%20initially%20offered%20because%20part%20of%20the%20money%20was%20going%20to%20be%20re-invested%20in%20the%20development%20phase.%20A%20proposal%20that%20the%20government%20did%20not%20agree%20to%20then,%20but%20insisted%20on%20receiving%20Shs624.5%20billion%20(about%20$167%20million).a%20href=https://ibekachikwu.com/wp-content/uploads/2020/08/28035697-1a8d-44cd-b3c2-8a365d31bc0b.jpgimg%20class=size-medium%20wp-image-2545%20alignright%20src=https://ibekachikwu.com/wp-content/uploads/2020/08/28035697-1a8d-44cd-b3c2-8a365d31bc0b-300x300.jpg%20alt=%20width=300%20height=300%20//aUpon%20completion%20of%20the%20transaction,%20strongTotal/strong%20is%20to%20pay%20the%20company%20Shs1.8%20trillion%20($500m)%20and%20another%20Shs280b%20($75m)%20paid%20whenever%20government%20and%20the%20oil%20companies%20(Total%20E&P%20and%20CNOOC)%20reach%20a%20Final%20Investment%20Decision%20(FID).%20Tullow%20will%20also%20receive%20contingent%20payments%20linked%20to%20the%20oil%20price,%20which%20is%20payable%20after%20production%20begins.French%20strongTotal%20E&P/strong%20will%20hold%20the%20majority%20stake%20with%2066.7%,%20and%20CNOOC%20will%20remain%20with%20its%2033%%20after%20the%20Chinese%20firm%20declined%20to%20exercise%20its%20pre-emptive%20rights%20which%20would%20have%20seen%20it%20acquire%20half%20of%20the%20Tullow%20shares.The%20company%20said%20the%20Energy%20Minister%20of%20Uganda,%20Goretti%20Kituttu%20had%20approved%20the%20transfer%20of%20operatorship%20for%20Block%202%20in%20Buliisa,%20east%20of%20Lake%20Albert.%20It%20read,%20em“With%20all%20the%20government-related%20conditions%20to%20closing%20having%20been%20satisfied,%20Tullow%20expects%20the%20transaction%20to%20close%20in%20the%20coming%20days%20after%20completing%20certain%20customary%20pre-closing%20steps%20with%20Total.”/emThe%20new%20arrangement%20will%20also%20allow%20the%20commencement%20of%20negotiations%20on%20the%20shareholders’%20agreement%20for%20the%20proposed%20East%20African%20Crude%20Oil%20Pipeline%20(EACOP)%20that%20will%20transfer%20crude%20from%20Hoima,%20Uganda,%20to%20Tanga,%20Tanzania.The%20current%20working%20structure%20is%20that%20both%20Total%20E&P%20and%20CNOOC%20each%20takes%2037.5%%20stake;%20Uganda,%20through%20the%20National%20Pipeline%20Company%20takes%2015%;%20and%20Tanzania%20through%20its%20national%20oil%20company%20–%20Tanzania%20Petroleum%20Development%20Corporation%20(TPDC),%20takes%20a%205%%20stake){kind=link}