Reports Leo Odera Omolo
THE Government will not rush to approve the sale of the $1.5b oil fields before its interests are “satisfactorily” met. This reaffirms its position to build an oil refinery in the country.
The fields belong to Heritage Oil.
“We have different options, but I can assure you that the Government cannot approve a project that does not satisfy our conditions,” Ernest Rubondo, the commissioner in charge of petroleum exploration and production department, said in an interview.
“We are still reviewing the process to ensure they meet our interests.”
The Government wants early commercialization of the petroleum resources, value addition and listing by the companies on the Ugandan stock market.
The other conditions are based on the prospective firm’s investments in Uganda’s oil and gas sector and avoidance of a monopoly in the Albertine Graben rift basin.
The declaration came at a time when Tullow, one of the firm interested in buying the fields, said its bid would be “approved in few weeks time.”
“A formal request for the Government consent for the assets to be transferred to Tullow was submitted. They have indicated their intention to approve this transaction in the next few weeks,” the firm said in an interim management statement yesterday.
A bid war over who should control the two oil fields, blocks 1 and 3A in northern and western Uganda ensued when Heritage oil in December agreed to sell its stake to the Italian firm.
The deal was that Eni would pay $1.35b as immediate payment, and a further $150m or a stake in a producing oil field of a similar value within two years, subject to approval by the Ugandan Government.
However, the deal was subject to Tullow exercising its pre-emptive rights. The initial agreement between Heritage and Tullow Oil stipulated that if one wanted to dispose of its stake, the other partner had the first option to buy.
Tullow exercised its right of pre-emption which is under review by Government and a decision is yet to be made. However there are fears that a monopoly would rise if Tullow owns the asset which will hand it 100% control and delay early oil production.
But yesterday, Tullow said it has been working closely with government to sell part of its interests. “Two partners have been selected, CNOOC and Total, and each partner will acquire a one third interest in each of the three blocks,” the firm said in its interim management statement.
“This will result in a unified partnership with considerable technical, operational and financial capability. In addition, it will enable Uganda to become a significant oil producing nation with the potential to produce at rates significantly in excess of 200,000 barrels of oil per day (bopd)”.
In separate interview, Jimmy Kiberu, the firm’s public affairs manager, said: “Tullow made it clear many times that it has no intention of holding 100% of the Lake Albert licences and will be bringing the partners into the project because of the immense financial muscle and technical expertise required to develop the whole basin and export the oil”.
Ends