Tullow Oil plc (Tullow) has announced completion of the sale of its assets in Uganda to French firm, Total, marking the end of its operations in the oil-rich East African country, Chimp Corps report.
The Irish oil firm said it received a consideration of $500 million earlier this Tuesday.
“Tullow is also due to receive a further $75 million when a Final Investment Decision is taken on the development project plus contingent payments linked to the oil price payable after production commences,” the oil firm said in a statement today.
“The closing of this transaction follows the satisfaction of all deal conditions, announced on 21 October 2020, which included the execution of the binding Tax Agreement, the approval for the transfer of Tullow’s interests to Total and the transfer of operatorship for Block 2.”
Kampala recently gave Tullow a green light to sell its $575 stake in the oil-rich Albertine region to, Total – a move expected to pave the way to the Final Investment Decision which has eluded the country for years.
The Uganda has since 2016 been lagging behind on the US$3.5billion project, owing to a number of tax disputes.
In 2019, the oil project suffered a major setback after Total SA terminated activities related on the pipeline following the collapse of a deal to buy a stake in Tullow Oil Plc’s interests in the Lake Albert Development Project.
However, Chinese state oil giant CNOOC recently waived its right to pre-empt the sale of a major oil field farm-out deal in Uganda to France’s Total.
Total agreed to buy out the Ugandan assets of troubled Tullow Oil in a $575-million deal that cleared up a tax dispute with the government hanging over the country’s maiden oil project.
Under the terms of the deal, Total has acquired all of Tullow’s existing 33.33% stake in each of the Lake Albert project licenses and the proposed export-pipeline system.
Government of Uganda and Total recently reached an agreement on the conditions of entry of the Uganda National Oil Company (UNOC) in the project as well as on the Host Government Agreement (HGA) which will govern the export pipeline project.
Although Tullow will retain a financial link to the development project through the potential contingent payments, the closing of this transaction marks Tullow’s exit from its licences in Uganda after 16 years of operations in the Lake Albert basin.
Rahul Dhir, Chief Executive Officer of Tullow Oil Plc, today said, “The closing of our transaction with Total clearly evokes mixed emotions within Tullow. While we are sad to be exiting Uganda after many years, the $575 million of proceeds form an important part of our plan to strengthen Tullow’s balance sheet and improve our financial position.”
He added: “We will watch the progress of Uganda’s oil and gas industry with much interest and all of us at Tullow wish the people and Government of Uganda and our former Joint Venture Partners every good fortune as they take this important project forward.”