Africa Business News of Thursday, 23 April 2020

Source: bbc.com

Tullow Oil sells its assets in Uganda to Total

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Tullow Oil has agreed to sell its assets in Uganda to the French energy giant Total for $575m (£465m).

The sale of Tullow's stake in a development project in the Lake Albert region ends the Irish company's long-running investment in Uganda, a period that has seen the company at odds with the government over issues like tax.

The oil reserves have still not been developed.

Tullow first discovered reserves of oil and gas in the west of Uganda in 2006, along with the Australian company Hardman, which it then bought out.

That financial deal led to a dispute with the Ugandan government over tax, which the Irish company eventually won through international arbitration.

The government in Kampala thought that Tullow was too small to develop the oil, as well as build a refinery, and that led to the Chinese energy giant CNOOC and Total of France becoming partners in the project.

In the last year Tullow, which has also oil operations in Ghana and Kenya, has run into financial trouble and following a boardroom shake-up decided to sell assets to reduce its debts.

The plan for Total to buy its stake in Uganda was initially derailed by the government, over how much tax should be paid on the deal, so the French company pulled out and suspended its plan to build a pipeline.

Now that deal has been revived and successfully agreed with Uganda's tax authority.

Both companies expect to conclude it this year, subject to agreement from Tullow shareholders and the consent of CNOOC, which has the right to buy 50% of the Irish company's stake in the Ugandan oil project.

Tullow's exit from Uganda comes after a decade of shifting government policy and the oil discovered in 2006 remains in the ground.

The company can now concentrate on trying to sell other assets in Africa, like its oil project in northern Kenya, from where it exported the country’s first oil last year, by transporting it in trucks to the coast.