Senior officials at Uganda’s energy ministry are optimistic agreement reached between Total and Tullow giving the French firm a chance to acquire Tullow’s entire interests in Uganda will speed up Final Investment Decision discussions.
In a press release reacting to the announcement by Total that it will acquire Tullow’s entire interests in Lake Albert development project including the East African Crude Oil Pipeline, energy minister Kitutu Mary Goretti Kimono described the deal as 'a significant milestone' and 'a critical development' in Uganda’s Oil and Gas Sector.
Robert Kasande the energy ministry's permanent secretary on his part acknowledged that government and the oil companies have in principle agreed 'on the tax treatment of the transaction.' Government is also aware of the preemption rights of CNOOC Uganda Ltd, he said.
Kasande said that the government is reviewing the Sale and Purchase Agreement (SPA) from the oil companies to facilitate grant of the necessary approvals and conclusion of the transaction.
Total said the overall consideration paid by Total to Tullow will be $575M, with an initial payment of $500M at closing and $75M when the partners take the Final Investment Decision to launch the project.
In addition, conditional payments will be made to Tullow linked to production and oil price, which will be triggered when Brent prices are above $62/bbl.
“The terms of the transaction have been discussed with the relevant Ugandan Government and Tax Authorities and agreement in principle has been reached on the tax treatment of the transaction,” Total said.
Under the terms of the deal, Total will acquire all of Tullow’s existing 33.3334% stake in each of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A and the proposed East African Crude Oil Pipeline (EACOP) System.
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