Uganda has denied any sale of its oil fields took place between the British and Italian firms.
Business News By Leo Odera Omolo In Kisumu City.
The controversy ridden alleged sale of an oil field, by Heritage British Oil Company, to an Italian firm, Eni Spa, has taken a new dimension ,with the Kampala regime vehemently denying that transaction has taken place officially.
The government owned daily, the NEWVISION, said in its front page article today that the government has yet to approve the reported sale of any of the country’s oil fields.
Mr Ernest Rubando, a senior Commissioner in charge of petroleum exploration and production department in the Ministry of Energy, was quoted as saying that any transaction related to the oil discovered in the Albert basin is subject to the government approval.
Heritage Oil, a British multinational oil company, in a statement issued from its London office, confirmed that it had entered into a letter of intent to sell its interests in the two oil blocks to Eni Spa,an Italian oil company.
The blocks are owned by both Heritage Oil and Tullows Oil on a 50-50 per cent joint venture.
Heritage acknowledged that the completion of the USD 1.5 billion deal was still subject to approval by the majority of its shareholders and the Ugandan government.
The Heritage statement added that the government of Uganda had been consulted on the proposed transaction, and had indicated its support fore Eni’s entrance.
According to the deal, Eni will pay USD 1.35 billion upfront and a further sum of USD 150 million in cash for a stake in a producing oil field of similar value within two years, provided certain conditions are met.
“Following a strategic review, it was decided to enter into this letter of intent with Eni Spa, in view of the very large multi-billion dollar investment, which is required to develop the Albert Basin and the related infrastructure”, Heritage boss Tony Buckingham, was quoted by the NEWVISION as having remarked.
However, the price is below most analysts valuation of the Ugandan oil fields. One such analyst, a Mr Morgan Stanley, is said to have valued them at USD 2 billion.
“The discount reflects Heritage’s cash requirement to fund Kurdstan oil, a perception as a forced seller”, Stanley is further quoted as saying in his research note.
The Ugandan deal is the latest in a string of African acquisitions by Eni in recent years. The Italian company is currently present in 70 countries, among them in West and North Africa.
Eni is Italy’s largest industrial company, with market capitalization of USD 138 billion as at July 2008.
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