The Government of Uganda has applauded the agreement reached between Total and Tullow; which will see Total acquire Tullow’s entire interests in the Uganda Lake Albert Development Project.
The Minister of Energy and Mineral Development, Kitutu Mary Goretti Kimono (pictured) welcomed the news. “The agreement is a significant milestone in Uganda’s Oil and Gas Sector and is a critical development that takes the sector towards the Final Investment Decision (FID) that the country is eagerly waiting for. FID is expected to bring an investment of over USD 20 Billion (Shs75.7 trillion),” she observed.
Robert Kasande the Permanent Secretary of the Ministry of Energy and Mineral Development acknowledged that government and the oil companies have in principle agreed on the tax treatment of the transaction. Government is also aware of the pre-emption rights of CNOOC Uganda Ltd.
He further noted that “the government has received the Sale and Purchase Agreement (SPA) from the oil companies which is being reviewed to facilitate grant of the necessary approvals and conclusion of the transaction.”
Yesterday Total and Tullow entered into an Agreement, through which Total shall acquire Tullow’s entire interests in Uganda Lake Albert development project including the East African Crude Oil Pipeline.
The overall consideration paid by Total to Tullow will be $575M (Shs2.1 Trillion), 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.
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. The transaction is subject to the approval of Tullow’s shareholders, to customary regulatory and government approvals and to CNOOC’s right to exercise pre-emption on 50% of the transaction.