Uganda, Oil Companies Set To Announce Breakthrough On Tullow Asset Sale
The government of Uganda and oil companies have reportedly reached a compromise, and are expected to announce progress on the Tullow oil farm down and East African Crude Oil Pipeline project.
A disagreement over tax between Uganda and Join Venture Partner (Total, Tullow and CNOOC) ensued when debt-ridden Tullow sought to reduce its 33.3% stake to about 11%, in order to raise $200 million to cut its net debt which stood at $2.9 billion at mid-2019.
Tullow, which called off the sale in August 2019 said they (the partners) could not reach an agreement with the Ugandan Revenue Authority on the tax relief for money to be paid by Total and CNOOC to Tullow. Reacting to the stalemate, Total suspended all activities relating to the 1,445-kilometer (898-mile) pipeline, saying shared ownership in the project was to be determined upon the completion of the Tullow deal. It further cited “uncertain” business environment in Uganda.
Kampala-based Daily Monitor Newspaper reported Monday that a meeting between Ugandan veteran leader Yoweri Museveni and Total’s Chief Executive Patrick Pouyanné (the third meeting in 2019) sought to end the deadlock and also conclude the remaining commercial agreements for the proposed East African Crude Oil Pipeline, leading to Final Investment Decision (FID).
President Museveni in a tweet on November 30, 2019 described the meeting as “fruitful.”
— Yoweri K Museveni (@KagutaMuseveni) November 30, 2019
Details on the points of agreement are still scanty, the Monitor said. However, sector regulators; Petroleum Authority Uganda (PAU) and Uganda National Oil Company (UNOC) expressed optimism.
“The project is technically mature, waiting to take off. Next year’s projection is once FID is taken everything will be good to go … what is clear is any delay affects government negatively as it does to the JV partners; our partners have invested a lot, so it is our interest that we work around the clock to speed up things,” Ali Ssekatawa, PAU’s director for legal and corporate affairs was quoted as saying by The Monitor.
He said all the technical studies on both upstream – Tilenga Oil project, Kingfisher, and the pipeline which is expected to carry Uganda’s crude oil to Tanzania’s Tanga Port have been concluded and requisite approvals have been granted or in the offing.