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Heritage Oil pulls out of Uganda

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by ByaseL, Nov 23, 2009.

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    ByaseL JF-Expert Member

    Nov 23, 2009
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    By Vision reporter and agencies

    British oil explorer Heritage Oil will sell its fields in Uganda to Italian oil group Eni SpA for between $1.3b and $1.5b, the London-based Sunday Times said yesterday.

    Talks are continuing and a deal could be announced as early as today, the paper added.

    The Sunday Times further said Heritage will pay a special dividend to return some of the proceeds from the Ugandan deal to its shareholders.

    Asked if the deal was confirmed, Brian Westwood of Heritage Uganda said: “It is only official once it is on the Heritage website.”

    Heritage, which is in talks with Turkey’s Genel Energy regarding a proposed $6b merger, holds a 50% interest in two licences in Uganda, while Tullow Oil holds the other 50%.

    The fields, located in the Albert Basin, are estimated to contain more than 700 million barrels of gross resources and are described by Heritage as “the most exciting new oil and gas play in sub-Saharan Africa in the past decade.”

    A London analyst suggests that the reason for Heritage’s pullout could be lack of capital and experience to build a refinery and pipeline. This a condition insisted upon by the Ugandan Government.

    “It looks like there will have to be a pipeline and a refinery, in neither of which Heritage has any experience,” Peter Hitchens is quoted by Bloomberg, a financial website. “It’s stuff for the big boys.”

    Tullow Oil is looking to sell up to 50% of its own stake. It is particularly looking for investors to help develop the refinery and the pipeline.

    Aidan Heavey, the boss of Tullow Oil, said potential new partners include unidentified “Chinese and major oil companies,” according to the Sunday Times.

    A spokeswoman for Eni declined to comment on the deal, while Heritage could not be reached, the newspaper added.

    Tullow Uganda said they were not consulted.

    A total of 800 million barrels of oil have so far been confirmed in Uganda but oil exploration companies are looking at a potential of two billion barrels.

    Heavey told The New Vision in September that what had been discovered so far was worth nearly $50b.

    Tullow is also negotiating with the Congolese government to get the concession for the other side of Lake Albert.

    In the interview, Heavey said enough oil had been discovered for Uganda to go alone but it made sense from a regional point of view to produce the oil from Congo and Southern Sudan through one system.

    “It might make sense if you had a central hub for distribution in Uganda and have other countries linked to that central hub. That would be a cost-effective way of doing it. It could be a project that brings stability in the whole area,” he explained