2 April 2011

French and Chinese Oil Companies Agree to Pay U.S. $2.9 Billion for Oil Fields

Total a French oil company and the China National Offshore Oil Company (CNOOC) have agreed to pay $2.9 billion (Shs6.9 trillion) for stakes in Tullow Oil's assets in Uganda.
British firm Tullow Oil yesterday announced details of the Sale and Purchase Agreements (SPAs) with CNOOC and Total in Kampala, a day after the deal was signed in Hong Kong, China.
Last year, Tullow paid over $1 billion to Heritage Oil and Gas to own 100 per cent of the oil blocks 1 and 3A. Heritage gave up half of its stake in the fields in the $1.5 billion deal that aroused a $404 million tax dispute with the government.
Mr Brain Glover the General Manager Tullow Oil Operations in Uganda said the new deal will pave way for the construction of a $10 billion refinery in Uganda with its new partners.
In a statement issued in London, Mr Aidan Heavey, Chief Executive Tullow Oil, added; "Tullow, its partners and the Government of Uganda will now agree a development plan for the Lake Albert Rift Basin with a target of delivering production of at least 200,000 barrels of oil per day and potentially much more as we continue to explore and appraise the basin."
The announcements come two weeks after Tullow, the government and the Uganda Revenue Authority (URA) signed a memorandum of understanding (MOU) to lighten the $404 million tax dispute that remains over the 2010 Heritage-Tullow 2010 deal. The MoU now recognizes the Heritage and Tullow deal as binding unlike before.
In the MoU, Tullow agreed to pay $313.4 million in taxes relating to the 2010 sale, within 10 days of signing the SPAs, to the government through Uganda Revenue Authority. Mr Glover said the money will be paid as "security" to the government as the tax arbitration process between the government, and Heritage takes place. The next step is for Tullow to deposit the security to government for it to be able to sale its interest to Total and CNOOC.

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