Tullow oil bitter, claims gov’t frustrating sale of its stake Uganda’s oil blocks

By Our Reporter

Tullow Oil has said efforts to sell its stake in its Ugandan operations are being frustrated by prolonged government negotiations.

Tullow Oil’s CEO Paul McDade while speaking to Bloomberg, an online news agency, said efforts to sell off a 21.57 per cent stake in Ugandan exploration areas to Total SA continue to stall with government persistently failing to give the deal a go-ahead.

“What we put together we thought was in the best interest of all parties, including the government of Uganda. We feel somewhat frustrated [two and half years] later that the efforts on that farm-down structure have been unsuccessful in completing,” he said, noting that they were now looking for alternative ways to get the deal done.
“What we are doing is gently standing back and looking at: Are there other ways to structure the deal?” It’s really just about not continuing just to try and push the same thing,” McDade said in an interview with Bloomberg.

In February, Cabinet okayed the move for Tullow to sell up to 21.57 per cent of its stake to Total E&P.
It okayed Tullow’s proposed transfer of interests priced at about Shs3.4 trillion (US$900million) in Block 1, 1A, 2 and 3A to Total E&P.

Government had endorsed Tullow’s desire to sale its assets to Total E&P subject to the payment of $167m (about Shs614b) in Capital Gains Tax.

“On November 21, 2018 I gave conditional consent for this transaction, subject to payment of the tax obligations as assessed by Uganda Revenue Authority (URA),” Energy minister Eng. Irene Muloni said at a briefing about the status of Uganda’s oil sector.
In the interview with Bloomberg, McDade said negotiations for the sale were now focused on taxes related to the transaction, claiming that whereas Tullow had agreed to the principle terms for its portion of the levies earlier this year, the deal is yet to be finalised.

Days ago Eagle Online reported how President Yoweri Museveni was unhappy with Tullow Oil Uganda officials over the same issue.