Tullow Finally Sells To Total & CNOOC

3016 Views Kampala, Uganda

In short
Tullow Oil which has been the sole operator in the oil wells around the Lake Albert area, will now transfer at least 66.6% of its share to Total and China National Offshore Oil Corporation—CNOOC. The deal is worth US$2.9 billion.

The long awaited deal to have French and Chinese oil companies to develop oil fields has been concluded ahead of anticipated commercial oil production in Lake Albert Basin.

Tullow Oil which has been the sole operator in the oil wells around the Lake Albert area, will now transfer at least 66.6% of its share to Total and China National Offshore Oil Corporation—CNOOC. The deal is worth US$2.9 billion.
 
The announcement follows the February 3rd signing of Production Sharing Agreements and the Kingfisher production license with the Government of Uganda.

Li Fanrong, CNOOC’s Chief Executive Officer says the completion of the transaction will not only add value to its shareholders but will also expedite the oil development programme in Uganda’s oil industry.

Aiden Heavy, Tullow Chief Executive officer in a statement said they will work with its new partners and government towards major oil production. He said the three partners are commencing drilling and exploration in Kanywataaba, west of River Nile. Heavy noted that the Lake Albert Rift Basin is one of Africa’s most exciting oil discoveries and that having these two new Partners will help drive this oil project towards major production.

A statement from Tullow oil shows that with the completion of this process, it is expected that small-scale oil and gas production for the local power market will commence in 2013 from the Kaiso-Tonya area.

The statement further states that major production from the Lake Albert Basin is anticipated to commence approximately 36 months after a basin-wide plan of development is approved by the Government of Uganda. Based on this timetable, ramp-up to major production would commence in 2016.
 
In accordance with the Government of Uganda farm-down consents, operatorship responsibilities within the basin will be divided between the Partners. Total will operate Exploration Area-1 (EA-1) and Tullow will operate Exploration Area-2 (EA-2). In the former Exploration Area-3A, CNOOC will operate the new Kanywataaba license and the Kingfisher production license.

Rueben Kashambuzi, the chief Oil technical advisor to Energy Ministry in an interview said the sealing of the new deal among the three oil companies now moves the oil sector to a stronger position.

Kashambuzi says having three operators independent of one another has added advantage of increased investment in the Oil exploration and production. He explained that Tullow would have had financial constraints if it were left to run all the three exploration areas and that the coming on board of two other partners that are more experienced in the oil sector spreads the risk and adds more expertise to the nascent oil industry.

The new deal, however, comes amidst a major standoff between parliament and the Executive. Parliament late last year wanted all transactions in the oil industry to be halted until new laws on oil are enacted. Some of the bills on the sector were presented to Parliament this month but they are yet to be considered. But the president went ahead and ordered the minister of energy Irene Muloni to sign new production sharing agreements with Tullow, a move that gave Tullow a go ahead to farm down to Total and CNOOC.

President Museveni on Monday said he had intercepted a letter to the British Parliament asking it to investigate the oil agreements government signed with Tullow.