Govt’s green light to Total raises its stake to 66.66% Kampala, Uganda | RONALD MUSOKE | French oil firm, Total, will become the biggest shareholder in Uganda’s oil project following the government’s approval of the sale of Tullow’s 33.33% stake of its Ugandan assets at US$ 575 million (Approx. Shs 2 trillion).
This new development means that the French firm’s interest in the Lake Albert Development Project has increased to 66.66% while the rest is held by the China National Offshore Oil Corporation (CNOOC).
Tullow Oil plc said in a short statement on Oct.21 that the government together with the Uganda Revenue Authority had finally “executed a binding tax agreement that reflects the pre-agreed principles on the tax treatment of the sale of Tullow’s Ugandan assets to Total.”
Tullow said that with all the government-related conditions to closing the transaction having been satisfied, it expected the deal to be closed “in days” after completing certain customary pre-closing steps with Total.
“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,” Tullow said.
Tullow will receive US$500 million (Approx. Shs 1.875 trillion) and a further US$75 million (Approx. Shs 281bn) when a Final Investment Decision is taken on the development project. In addition, Tullow is entitled to receive contingent payments linked to the oil price payable after production commences.
Knotty transaction
Tullow had originally struck a deal with Total for a farm-down of its licences at US$900 million in 2017. However, the transaction later collapsed after the government insisted that Tullow pay US$167 million before it could transfer its assets to Total and CNOOC.
Tullow Oil Plc, the parent company of Tullow Oil Uganda at the end of August last year terminated the planned farm-down. A month later, in September, 2019, Total suspended its technical activities on the East African Crude Oil Pipeline (EACOP) following the collapse of Tullow’s proposed sale of its Ugandan interests.
Pierre Jessua told The Independent at the time that Total could not continue with its technical activities “when they don’t see a breakthrough on a shareholding agreement and the legal framework for the pipeline.”
Interestingly, in April this year, as the world was grappling with the COVID-19 pandemic, Tullow announced that it had finally reached an agreement to sell its Ugandan assets to Total.According to the agreement, Tullow said it would receive up to US […]