THE UGANDAN GOVERNMENT HAS APPROVED THE SELLING OF HERITAGE OIL COMPANY INTERESTS IN THE OIL FIELD TO ITS PRINCIPAL PARTNER.
Business Reports by Leo Odera Omolo.
The government of Uganda this week announced its approval of Tullow Oil offer to buy out its principal partner, the Heritage Oil Company, according to a cabinet Minister.
In an exclusive interview with the SUNDAV
ISION, THE Minister of State for Minerals Development, Peter Lokoris said, “we met on Wednesday and considered the pre-emption right of Tullow Oil and approved it.”
“The decision is final”, said the Minister. The announcement by the Minister therefore means Eni’s previously announced business deal and transactions with the Heritage Oil is out, which in essence locks out the Libyan oil Company, which is said to have a stake in the Eni Oil. Both teams have visited Kampala in the past weeks and held a series of meetings among themselves and with the top Ugandan officials, including President Yoweri Museveni.
Two oil fields, Block 1 and Block 3A in Western Uganda, are jointly owned by Heritage and Tullow in a 50-50 per cent joint venture
“We appreciate what Tullow has done in exploration work and finding the oil and we respect the sanctity of the laws,” said the Minister.
The Minister explained that the decision was made on the initial agreement between Heritage and Tullow, which stipulates that if one partner wants to dispose of its stakes, the other partner had the first option to buy it.”
The approval ends a bid war that had emerged over who was to take over the oil fields. Heritage announced in December last year that it had agree to sell its stake to the Italian Oil giant company Eni for USD 1.5 billion.
Tullow, however, exercised its right of pre-emption. It announced last Monday that it was willing to match Eni’s offer and signed an agreement with the Heritage for the proposed oil fields take over.
The deal, however, still was to become subject to the government’s conditions such as paying taxes.
Lokoris said Tullow would now be required to follow the government conditions. Energy Ministry sources in Kampala say things would work well in favor of Tullow, and that other considerations include the level of the company investment in Uganda, and avoidance of a monopoly situation
Other sources say that there was a strong alignment with the government of Uganda’s interests, including early commercialization of the petroleum resources, value addition, and listing in the Ugandan Stock Exchange.
Tullow made an announcement last month that it plans to list on the Ugandan Stock Exchange, and that
Tullow Chief Operational Manager Mr. Aidan Heavey also dismissed fears that they were creating a monopoly in the Albertine Graben. “Tullow has no desire or intention to retain 100 per cent of the interest in Block 1,2 and 3AQ”, the company wrote to Mr.Onek on January 19, 2010.
“Immediately upon our acquisition of the HERITAGE interests in Block 1 and 3A we will farm-down {sell} at least 50 per cent of its interests in all three blocks to one or more partners acceptable to the government of Uganda.
It added that the operation ship and other roles of the partners will be “fully discussed and agreed with the government”.
Recently, the bosses of the stated-owned China National Off-shore oil Company met oil and gas industry officials. Tullow has indicated that the Chinese company and French Total would be their preferred partners to build a refinery and pipeline.
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