Total seeks to exit Kenyan market after Tullow oil buyout in Uganda

Geza Ulole

JF-Expert Member
Oct 31, 2009
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UPDATE 2-Tullow exits Uganda project, sells stake to Total for $575 mln


By Shadia Nasralla
LONDON, April 23 (Reuters) - Total has agreed to buy Tullow Oil’s entire stake in jointly-held onshore oil fields in Uganda for $575 million, Tullow said on Thursday as it strives to raise $1 billion this year to reduce its $2.8 billion of debt.

Tullow, founded in the 1980s to tap into African oil and gas, suffered a series of technical difficulties and missed production targets, leading its chief executive to step down late last year.

Now, along with the entire oil industry, it faces unprecedented turmoil in the oil markets as lockdowns to contain the new coronavirus have wiped out demand and the international oil price has lost roughly two thirds of its value since the start of the year.

Tullow’s shares have shed around 90% over the last 12 months and its market capitalisation had shrunk to around $285 million on Wednesday. Its shares were up around 39% at 0725 GMT at 27.99 pence, having earlier peaked at 35.5 pence.

“Tullow has achieved a decent price in a tough market at a difficult time. However, its ‘survival strategy’ requires the depletion of its opportunity set to pay down debt,” RBC analyst Al Stanton said in a note.

Tullow said on Thursday it will receive $500 million in cash for the Ugandan prospects and $75 million once a final investment decision is reached on the project.

Total said it had a good deal.

“We are pleased to announce that a new agreement has been reached with Tullow ... for less than $2 a barrel in line with our strategy of acquiring long-term resources at low cost, and that we have an agreement with the Uganda government on the fiscal framework,” Total Chief Patrick Pouyanne said in a statement.

An agreement on a tax issue with the Ugandan authorities, which had delayed the sale of a smaller stake in the project to Total for months, has been reached in principle, Tullow said.

The deal depends on the two companies signing a final tax agreement with the Ugandan authorities and a green light from Tullow’s shareholders. It expects the deal to close in the second half of the year.

If completed, it would be the first significant deal in the oil sector since the price crisis began in earnest in early March.

Total will pay Tullow more once production has started and once the benchmark Brent oil price reaches $62 a barrel, Total said, compared with around $22 now.

The third partner in the 230,000 barrel per day project, China’s CNOOC, has pre-emption rights for half of the stake to be sold to Total.

Money from the sale will be used “to reduce Tullow’s net debt, strengthening the balance sheet and moving Tullow towards a more conservative capital structure,” Tullow said.

“Tullow has consulted with shareholders holding approximately 27.5% in aggregate of Tullow’s issued share capital and is pleased to report that they have indicated their support for the transaction,” it added.

Executive Chair Dorothy Thompson told Reuters that raising at least $1 billion from divestments would eliminate the prospect of any debt-for-equity swap.

To reach its divestment target, Tullow is also trying to sell stakes in undrilled exploration acreage and part or all of its stake in Kenya, where it also partners with Total.

Total is also seeking to reduce its Kenyan stake, sources told Reuters in January.

Reporting by Shadia Nasralla; editing by Susan Fenton and Barbara Lewis

Source: Reuters


MY TAKE: With plans for Total to divest from Lokichar deal n Tullow oil poor financial muscles, will Lokichar-Lamu pipleine see the light?


#Akilizahandshake#

CC: Zigi Rizla Kafrican Depay Teargass Tony254 pingli-nywee komora096 Edward Wanjala
 
Total and Tullow launch joint sale of stakes in Kenyan oil project: sources

LONDON/ PARIS (Reuters) - Total (TOTF.PA) and Tullow Oil (TLW.L) aim to reduce their stakes in Kenya’s first oil development with a joint sale that could see Tullow exit completely amid uncertainty over the project’s launch, banking and industry sources said.

761b5302a29f425387a5788378acfcd6.png

FILE PHOTO: A worker at a Tullow Oil exploration drilling site in Lokichar, Turkana County, Kenya, February 8, 2018. REUTERS/Baz Ratner/File Photo

The two oil and gas producers have hired French bank Natixis to run the joint sale process for Blocks 10 BA, 10 BB and 13T in the South Lokichar Basin, the sources said.

London-listed Tullow, which operates the project, last year indicated it intended to sell up to 20% of its 50% stake in the blocks. However, the sources said it is now willing to sell the entire stake after disappointing exploration results in Guyana and production problems in Ghana that prompted the ousting of its chief executive and wiped out nearly half of the company’s market value.

French oil major Total, meanwhile, aims to sell up to half of its 25% stake in the Kenyan project, the sources said.

Tullow, Total and Natixis declined to comment.

The entire project is valued at between $1.25 billion to $2 billion, but it is hard to be precise because the development has yet to receive a final investment decision (FID), two of the sources said.

Tullow this month said it was still targeting FID by the end of 2020, with production starting in 2022, describing the timeline as “challenging”.

The fields already produce about 2,000 barrels of oil per day as part of an early production system. The oil is trucked from Turkana to the port city of Mombasa. A first cargo of 250,000 barrels was shipped on a tanker last August.

The project partners have also agreed with the Kenyan government to develop a crude oil pipeline from Lokichar to Lamu on Kenya’s coast.

Tullow and Toronto-listed Africa Oil (AOI.TO), which holds a 25% stake in the blocks, first discovered crude oil in the Lokichar basin in 2012. Tullow estimates the fields contain 560 million barrels in proven and probable reserves and expects them to produce up to 100,000 barrels per day from 2022.

Reporting by Ron Bousso; Editing by David Goodman

Total and Tullow launch joint sale of stakes in Kenyan oil project: sources
 
Waondoke tu. Wanunuzi watapatikana tu kisha waende zao. Uchumi wa Kenya wa $100 billion hautegemei mafuta hata kidogo
Maneno ya kukata tamaa! Poleni sana that broke briefcase company Tullow oil will f*ck u up!

 
Eeh Geza. What I've understood from this whole scenario is that Tullow wants to sell it's stake in Turkana. To who? Well Total is one of the prospective buyers plus they have already bought the fields in Uganda.

Actually you guys should be holding your breath with regards to the Hoima Tanga pipeline. What if they get the oilfields in northern kenya and rather than spend fortunes on two pipelines, opt for a joint single project through Kenya? 😹 Because honestly why would they opt for TZ where they have no vested interests/no fields. Plus Uganda may not have/get the funds for the very long pipeline to Tanga considering the peanuts they got from Tullow selling their stake to Total (note this happened when this pandemic has resulted in a turmoil in the oil industry).

Now couple that with how UG spent 400million USD purchasing the Sukhoi jets and T 90 tanks some time back, with hindsight of the potential cash they would receive from their oil fields. Where will they get this cash from? If getting funds alone for SGR is proving difficult. If I were Uganda in this quagmire, I would hop on a joint pipeline to Kenya. (Shorter distance to Lokichar and an even shorter distance to Lamu).

Interesting times.

Watch out for many outcomes/possibilities with this new turn of events.
 
They are welcomed to Tanzania "nchi ya Viwanda"
Our economy depends on Oil
 
Eeh Geza. What I've understood from this whole scenario is that Tullow wants to sell it's stake in Turkana. To who? Well Total is one of the prospective buyers plus they have already bought the fields in Uganda.

Actually you guys should be holding your breath with regards to the Hoima Tanga pipeline. What if they get the oilfields in northern kenya and rather than spend fortunes on two pipelines, opt for a joint single project through Kenya? 😹 Because honestly why would they opt for TZ where they have no vested interests/no fields. Plus Uganda may not have/get the funds for the very long pipeline to Tanga considering the peanuts they got from Tullow selling their stake to Total (note this happened when this pandemic has resulted in a turmoil in the oil industry). Now couple that with how UG spent 400million USD purchasing the Sukhoi jets and T 90 tanks some time back, with hindsight of the potential cash they would receive from their oil fields. Where will they get this cash from? If getting funds alone for SGR is proving difficult. If I were Uganda in this quagmire, I would hop on a joint pipeline to Kenya. (Shorter distance to Lokichar and an even shorter distance to Lamu).

Interesting times.

Watch out for many outcomes/possibilities with this new turn of events.

Wacha kusoma magazeti ya maandazi!

UPDATE 2-Tullow exits Uganda project, sells stake to Total for $575 mln

* Tullow to use money to reduce $2.8 bln debt burden
* Targets divestments of at least $1 bln this year
* Total says pleased to acquire fields for less than $2/bbl (Adds details on deal, hedges, other potential divestments)

By Shadia Nasralla
LONDON, April 23 (Reuters) - Total has agreed to buy Tullow Oil’s entire stake in jointly-held onshore oil fields in Uganda for $575 million, Tullow said on Thursday as it strives to raise $1 billion this year to reduce its $2.8 billion of debt.

Tullow, founded in the 1980s to tap into African oil and gas, suffered a series of technical difficulties and missed production targets, leading its chief executive to step down late last year.

Now, along with the entire oil industry, it faces unprecedented turmoil in the oil markets as lockdowns to contain the new coronavirus have wiped out demand and the international oil price has lost roughly two thirds of its value since the start of the year.

Tullow’s shares have shed around 90% over the last 12 months and its market capitalisation had shrunk to around $285 million on Wednesday. Its shares were up around 39% at 0725 GMT at 27.99 pence, having earlier peaked at 35.5 pence.

“Tullow has achieved a decent price in a tough market at a difficult time. However, its ‘survival strategy’ requires the depletion of its opportunity set to pay down debt,” RBC analyst Al Stanton said in a note.

Tullow said on Thursday it will receive $500 million in cash for the Ugandan prospects and $75 million once a final investment decision is reached on the project.

Total said it had a good deal.

“We are pleased to announce that a new agreement has been reached with Tullow ... for less than $2 a barrel in line with our strategy of acquiring long-term resources at low cost, and that we have an agreement with the Uganda government on the fiscal framework,” Total Chief Patrick Pouyanne said in a statement.

An agreement on a tax issue with the Ugandan authorities, which had delayed the sale of a smaller stake in the project to Total for months, has been reached in principle, Tullow said.

The deal depends on the two companies signing a final tax agreement with the Ugandan authorities and a green light from Tullow’s shareholders. It expects the deal to close in the second half of the year.

If completed, it would be the first significant deal in the oil sector since the price crisis began in earnest in early March.

Total will pay Tullow more once production has started and once the benchmark Brent oil price reaches $62 a barrel, Total said, compared with around $22 now.

The third partner in the 230,000 barrel per day project, China’s CNOOC, has pre-emption rights for half of the stake to be sold to Total.

Money from the sale will be used “to reduce Tullow’s net debt, strengthening the balance sheet and moving Tullow towards a more conservative capital structure,” Tullow said.

“Tullow has consulted with shareholders holding approximately 27.5% in aggregate of Tullow’s issued share capital and is pleased to report that they have indicated their support for the transaction,” it added.

Executive Chair Dorothy Thompson told Reuters that raising at least $1 billion from divestments would eliminate the prospect of any debt-for-equity swap.

To reach its divestment target, Tullow is also trying to sell stakes in undrilled exploration acreage and part or all of its stake in Kenya, where it also partners with Total.

Total is also seeking to reduce its Kenyan stake, sources told Reuters in January.

Reporting by Shadia Nasralla; editing by Susan Fenton and Barbara Lewis

UPDATE 2-Tullow exits Uganda project, sells stake to Total for $575 mln


#Akilizahandshake#

CC: Zigi Rizla Kafrican Depay Teargass Tony254 pingli-nywee komora096 Edward Wanjala
 
Eeh Geza. What I've understood from this whole scenario is that Tullow wants to sell it's stake in Turkana. To who? Well Total is one of the prospective buyers plus they have already bought the fields in Uganda.

Actually you guys should be holding your breath with regards to the Hoima Tanga pipeline. What if they get the oilfields in northern kenya and rather than spend fortunes on two pipelines, opt for a joint single project through Kenya? 😹 Because honestly why would they opt for TZ where they have no vested interests/no fields. Plus Uganda may not have/get the funds for the very long pipeline to Tanga considering the peanuts they got from Tullow selling their stake to Total (note this happened when this pandemic has resulted in a turmoil in the oil industry). Now couple that with how UG spent 400million USD purchasing the Sukhoi jets and T 90 tanks some time back, with hindsight of the potential cash they would receive from their oil fields. Where will they get this cash from? If getting funds alone for SGR is proving difficult. If I were Uganda in this quagmire, I would hop on a joint pipeline to Kenya. (Shorter distance to Lokichar and an even shorter distance to Lamu).

Interesting times.

Watch out for many outcomes/possibilities with this new turn of events.

Early March, two senior ministers were in Dar to give an update of Tax negotiation btn Kampala and Tullow oil and the construction of EACOP. Why didn't they go to Kunyaland?







#Akilizahandshake#

CC: Zigi Rizla Kafrican Depay Teargass Tony254 pingli-nywee komora096 Edward Wanjala
 
Eeh Geza. What I've understood from this whole scenario is that Tullow wants to sell it's stake in Turkana. To who? Well Total is one of the prospective buyers plus they have already bought the fields in Uganda.

Actually you guys should be holding your breath with regards to the Hoima Tanga pipeline. What if they get the oilfields in northern kenya and rather than spend fortunes on two pipelines, opt for a joint single project through Kenya? 😹 Because honestly why would they opt for TZ where they have no vested interests/no fields. Plus Uganda may not have/get the funds for the very long pipeline to Tanga considering the peanuts they got from Tullow selling their stake to Total (note this happened when this pandemic has resulted in a turmoil in the oil industry). Now couple that with how UG spent 400million USD purchasing the Sukhoi jets and T 90 tanks some time back, with hindsight of the potential cash they would receive from their oil fields. Where will they get this cash from? If getting funds alone for SGR is proving difficult. If I were Uganda in this quagmire, I would hop on a joint pipeline to Kenya. (Shorter distance to Lokichar and an even shorter distance to Lamu).

Interesting times.

Watch out for many outcomes/possibilities with this new turn of events.

French oil major Total, meanwhile, aims to sell up to half of its 25 percent stake in the Kenyan project.

The Tullow price for Kenya assets now values the entire at about Sh140 billion, but it is hard to be precise because the development has yet to receive a final investment decision (FID).

Tullow remains uncertain if the FID will be ready this year as planned earlier, describing the timeline as “challenging”.


The fields already produce about 2,000 barrels of oil per day as part of an early production system.

The oil is trucked from Turkana to the port city of Mombasa. A first cargo of 250,000 barrels was shipped on a tanker last August.

The project partners have also agreed with the Kenyan government to develop a crude oil pipeline from Lokichar to Lamu on Kenya’s coast.

Tullow and Toronto-listed Africa Oil, which holds a 25 percent stake in the blocks, first discovered crude oil in the Lokichar basin in 2012.

Tullow estimates the fields contain 560 million barrels in proven and probable reserves and expects them to produce up to 100,000 barrels per day from 2022.

Tullow values Kenya assets at Sh69 billion ahead of stake sale


#Akilizahandshake#

CC: Zigi Rizla Kafrican Depay Teargass Tony254 pingli-nywee komora096 Edward Wanjala
 
Eeh Geza. What I've understood from this whole scenario is that Tullow wants to sell it's stake in Turkana. To who? Well Total is one of the prospective buyers plus they have already bought the fields in Uganda.

Actually you guys should be holding your breath with regards to the Hoima Tanga pipeline. What if they get the oilfields in northern kenya and rather than spend fortunes on two pipelines, opt for a joint single project through Kenya? 😹 Because honestly why would they opt for TZ where they have no vested interests/no fields. Plus Uganda may not have/get the funds for the very long pipeline to Tanga considering the peanuts they got from Tullow selling their stake to Total (note this happened when this pandemic has resulted in a turmoil in the oil industry). Now couple that with how UG spent 400million USD purchasing the Sukhoi jets and T 90 tanks some time back, with hindsight of the potential cash they would receive from their oil fields. Where will they get this cash from? If getting funds alone for SGR is proving difficult. If I were Uganda in this quagmire, I would hop on a joint pipeline to Kenya. (Shorter distance to Lokichar and an even shorter distance to Lamu).

Interesting times.

Watch out for many outcomes/possibilities with this new turn of events.

Why Tullow, Total are shipping out of Kenya’s oil project dream

Workers walk past storage tanks at Tullow Oil's Ngamia 8 drilling site in Lokichar, Turkana County. [File, Reuters]

Tullow Oil is in the next six months set to sell the entire stake in the Lokichar oil blocks a move that could present major challenges for the country. Kenya expected to start the commercial phase of the project later this year, leading to first oil in 2022.

Reports indicate the firm, which has been steering development of the Project Oil Kenya as the operator of the blocks, could be selling its entire stake in the blocks. This may throw a major curve ball for the country’s ambition to commercially produce oil.

The firm, together with its other partner in the project Total Oil, have contracted French bank Natixis to run the joint sale process for Blocks 10 BA, 10 BB and 13T in the South Lokichar Basin.

According to a Thursday Reuters report, Tullow is eyeing to sell its entire stake in the oil blocks. It holds a 50 per cent stake in the three blocks.

The news report, which cited sources, said while Tullow has in the past said it planned to reduce its stake by up to 30 per cent, it could be selling its entire stake.

The decision may be due to “disappointing exploration results in Guyana and production problems in Ghana”, which led to resignation of the company’s chief executive and the exploration director in December.

The Ministry of Petroleum downplayed the development and noted that the company has always had its intentions to reduce the stake in the three oil blocks.

Petroleum Principal Secretary Andrew Kamau said both firms planned to off-load half of the stakes they have in the blocks. This would mean Tullow will offload a 25 per cent stake in the blocks while Total, which has a 25 per cent stake, will sell about 12.5 per cent.

“They made the announcement in November last year. It is not new… what they are saying now is that Natixis will do the sale,” said Kamau.

He added that the two firms will be “selling 50 per cent of what they have… in the first half of this year”.

The new development is on the background of delayed Final Investment Decision (FID), which Tullow said would take place later this year, having pushed it forward from an earlier date of 2019.

At FID, the joint venture partners are expected to commit resources as well as agree on award of key construction contracts. Only after FID can the partners award contracts for such critical aspects such as pipeline construction.

The Petroleum PS is still optimistic that despite the delays in reaching FID amid the challenges that Tullow faces, the project will not experience any delays.

“It will not necessarily affect us… it takes 18 months to build a pipeline. I do not think that it affects us,” said the PS.

His position could however be from a point of high optimism. Reports indicate that 18 months could be too ambitious and that the pipeline construction might take as much as three years.

“The Lokichar to Lamu Crude Oil Pipeline (LLCOP) Project is anticipated to take 33 to 36 months to construct from EPC contract award and the operational life is expected to be 25 years,” said the Environmental Impact Assessment report for the crude oil pipeline, which Tullow lodged with Nema in November.

Assuming the contracts are given in the course of 2020, the earliest the pipeline can be ready in late 2023.

Total Oil has not exactly been a fan of the Kenyan project, having played a role in convincing Uganda to ditch earlier plans of a joint pipeline with Kenya and instead build an export pipeline through Tanzania.

The pipeline project has since been suspended. The French oil major got to own a 25 per cent stake in the Lokichar blocks after acquiring Maersk Oil globally in 2017, which had acquired the stake from Africa Oil in 2015.

Why Tullow, Total are shipping out of Kenya’s oil project dream : The Standard

#Akilizahandshake#

CC: Zigi Rizla Kafrican Depay Teargass Tony254 pingli-nywee komora096 Edward Wanjala
 
Early March, two senior ministers were in Dar to give an update of Tax negotiation btn Kampala and Tullow oil and the construction of EACOP. Why didn't they go to Kunyaland?







#Akilizahandshake#

CC: Zigi Rizla Kafrican Depay Teargass Tony254 pingli-nywee komora096 Edward Wanjala

You are still talking about Tullow w.r.t Uganda? Hahah.

Relax, don't panic. Haitaki makasiriko. You're quoting me multiple times with regurgitated conjecture.

This pipeline project is not yet over the line. In fact all parties and stake holders will definitely be going back to the drawing board.

⏳tic tok.
 
You are still talking about Tullow w.r.t Uganda? Hahah.

Relax, don't panic. Haitaki makasiriko. You're quoting me multiple times with regurgitated conjecture.

This pipeline project is not yet over the line. In fact all parties and stake holders will definitely be going back to the drawing board.

⏳tic tok.
Those two ministers having been coming to Tanzania now n then to give update on the progress! BTW there is no Tullow Uganda anymore! There is Tullow Kenya and Total Kenya n both want to divest meaning there is no prospect as far as ur oil reserves r concerned!
 
African Energy Chamber: Uganda underlines intention to become major player

President Museveni, Tullow Oil and Total’s CEOs could not have chosen a better time to announce their agreement to resolve a long-standing capital gains tax dispute that had earlier prevented Tullow Oil from farming out its Lake Albert licenses to Total, according to the African Energy Chamber.

Last week, Tullow Oil announced that it has agreed the sale of its entire stake in the Lake Albert Development Project in Uganda to oil major Total for US$575 million in cash plus post first oil contingent payments. This is welcome news for both companies, Uganda, and the oil industry globally and in Africa in particular, all of which are going through a period of distress in the face of Covid-19 and crude oil prices crash.

This will automatically catapult Uganda to become East Africa’s biggest crude producer and provide much needed income for development and good paying jobs. Current estimates by the World Bank expect Uganda to register growth rates of over 10% per annum resulting from oil production and associated activity. “This deal shows a lot of foresight to make an acquisition of this nature for such an amazing but reasonable price. The resolution of disputes that paved an opening for this deal should be commended. President Museveni, Tullow Oil and Total understood that being proactive and making concessions is good for Uganda, jobs, contracts for locals and regional growth,” stated NJ Ayuk, Executive Chairman of the African Energy Chamber.

Most importantly, the deal sends the right signals to the market and investors, that despite the current challenges, Uganda is open and ready to do business. In line with the African Energy Chamber’s appeal to governments to show flexibility in appraising existing projects within the realities of the current business environment, the Government of Uganda with the direct involvement of H.E President Yoweri Kaguta Museveni was willing to cede ground and close the deal. This is good for Uganda and an example for other African countries facing the oil crisis to follow. It is likely to have positive effects far beyond the current crisis, with ever more explorers and oil companies likely to take another look at Ugandan acreage in an attempt to replicate Tullow Oil’s discovery successes.

The deal is also a huge boost for the construction of a pipeline that will transport the crude to international markets. “The proposed Uganda/Tanzania pipeline (East Africa Crude Oil Pipeline) in itself will not only lead to additional jobs being created, it will also render the entire country viable as a major oil frontier. It is a big win for the local and regional oil and gas industry and propels the East Africa region in playing a role in helping the energy sector rebound,” said Elizabeth Rogo, President of the Africa Energy Chamber for East Africa.

It is likely that other oil companies such as Oranto Petroleum will drill additional exploratory wells in adjacent blocks, in an effort to take advantage of the pipeline infrastructure. The pipeline also increases the attractiveness of oil blocks located in the south of oil producing neighbouring South Sudan. Potential discoveries there are now likely to fetch a lower breakeven point, due to reduced piping costs via Uganda.

Whilst acknowledging the willingness of the Government of Uganda to compromise on this particular tax dispute, thus enabling this ground breaking transaction, the African Energy Chamber continues to advocate for additional special measures that will facilitate a final investment decision by Total and its partners, and the deployment of capital to other drilling and geophysical projects in Uganda in the current business climate.

African Energy Chamber: Uganda underlines intention to become major player
 
TULLOW STAKE SALE PUTS UGANDA OIL PROJECT BACK ON TRACK
Photograph — Invest in Albania
After months of lengthy negotiations and disagreements, Tullow Oil Plc last week said it had signed a deal to sell all its stake in Uganda’s Lake Albert oil project to oil major Total for a reported sum of $575 million.

The deal will see Total acquire Tullow’s entire interests in Blocks 1, 1A, 2 and 3A in western Uganda and the proposed East African Crude Oil Pipeline System for the cash consideration – $500 million payable at completion and $75 million payable after the project’s final investment decision – including potential contingent payments after first oil.

With Tullow’s exit expected to be concluded later this year, the joint venture partners in the oil project now are Total and China National Offshore Oil Corporation (CNOOC), both of which currently hold 33.33 percent in all of Uganda’s discoveries.
The sale is in line with Tullow’s plan to cut on debt, strengthen its balance sheet and secure a more “conservative capital structure,” executive chairperson Dorothy Thompson said. But for Uganda, this represents a huge development in its long road to commercial oil production since hitting oil deposits in 2006 with proven reserves of 6.5 billion barrels, about 2.2 billion of which is recoverable.

Uganda had set a commercial production target of 2022 but progress has been slow. At some point, talks between the oil companies and Uganda Revenue Authority collapsed over the assessment of the capital gains tax that Tullow was expected to pay from the sale of its assets in the Lake Albert project.

Several of such dispute saw all parties in the oil project miss the August 2019 deadline initially set for FID, after which Total, the lead investor in the EACOP, suspended all activities on the $3.5 billion pipeline project.

The breakthrough asset sale deal, still subject to shareholder, regulatory and government approvals, now takes Uganda and its partners in the oil project back on course towards FID and eventual production, Total chief executive Patrick Pouyanne said.

“We are pleased to announce that a new agreement has been reached with Tullow to acquire their entire interests in the Lake Albert development project… This acquisition will enable us, together with our partner CNOOC, to now move the project forward toward FID, driving costs down to deliver a robust long-term project,” he said.

Welcoming the deal, Uganda’s Minister for Energy Mary Goretti Kitutu was quoted as saying the agreement represents a “significant milestone in Uganda’s oil and gas sector and is a critical development that takes the sector towards the Final Investment Decision that the country is eagerly waiting for.”

But experts have warned there may be further delay in the takeoff of Uganda’s projects as the global oil industry currently grapples with the unprecedented collapse of crude oil prices triggered the coronavirus pandemic, forcing oil majors to scale down investment and operations for 2020.

Tullow stake sale puts Uganda oil project back on track - Ventures Africa
 
CNOOC elects not to pre-empt sale of assets in Uganda

Tullow Oil plc (Tullow) announces that CNOOC Uganda Limited (CNOOC) has informed both Tullow and Total that it will not pre-empt the sale of Tullow’s assets in Uganda to Total.

On 23 April 2020, Tullow announced that it had agreed the sale of its assets in Uganda to Total and that CNOOC had rights of pre-emption to acquire 50% of these assets on the same terms and conditions as Total. CNOOC has now informed Tullow and Total that it has elected not to exercise its pre-emption rights. Accordingly, there are no changes to the previously announced transaction or timeline and Tullow continues to expect the transaction to complete in the second half of 2020.

The transaction remains subject to a number of conditions, including approval by Tullow’s shareholders, customary government and other approvals and the execution of a binding tax agreement with the Government of Uganda and the Uganda Revenue Authority that reflects the agreed tax principles previously announced. Tullow will now look to progress the tax agreement following CNOOC’s decision not to pre-empt.

For further information contact:

Tullow Oil plc
(London)
Murray Consultants
(Dublin)
(+44 20 3249 9000)
IR: Chris Perry & Matt Evans
Media: George Cazenove
(+353 1 498 0300)
Pat Walsh
Joe Heron
Notes to Editors

Tullow Oil plc

Tullow is a leading independent oil & gas, exploration and production group, quoted on the London, Irish and Ghanaian stock exchanges (symbol: TLW). The Group has interests in over 70 exploration and production licences across 15 countries in Africa and South America.

Follow Tullow on:
Twitter: www.twitter.com/TullowOilplc
YouTube: www.youtube.com/TullowOilplc
Facebook: www.facebook.com/TullowOilplc
LinkedIn: www.linkedin.com/company/Tullow-Oil
Website: www.Tullowoil.com

CNOOC elects not to pre-empt sale of assets in Uganda
 
Total seeking Kampala-Dar pipeline route for Kenya oil

Such a decision, still at the wishful thinking stage, would have far-reaching implications for Kenya’s grand infrastructure project — the Lamu Port-South Sudan-Ethiopia-Transport Corridor (Lapsset) — which includes an oil pipeline.Last year, Total used its influence, through several high level meetings with the presidents of both Uganda and Tanzania to successfully convince the Dar es Salaam and Kampala administrations to choose the Uganda-Tanzania route over Kenya’s route.Kenya says it is unaware of any preference by Total for the Kenyan oil to be moved through the Uganda-Tanzania pipeline.Uganda and Tanzania, together with the oil firms are working on the projects financing blueprint that will see the two countries raise 70 per cent of the total costs from international lenders.

By ALLAN OLINGO
More by this Author

French oil giant Total, which is consolidating its position in the region’s extractives sector through its full acquisition of Maersk Oil and Gas stake in Kenya’s South Lokichar oilfields, plans to push for discussions that would see Kenya’s oil transported through the Uganda-Tanzania pipeline.

Such a decision, still at the wishful thinking stage, would have far-reaching implications for Kenya’s grand infrastructure project — the Lamu Port-South Sudan-Ethiopia-Transport Corridor (Lapsset) — which includes an oil pipeline.

On Monday, Total announced that it had acquired 100 per cent equity stake in Maersk oil and gas in a share and debt transaction worth $7.5 billion.

Already, the company increased its shareholding in the existing Lake Albert assets in Uganda in January, after buying out Tullow’s 21.57 per cent stake worth $900 million.

READ: Total Kenya parent firm buys Maersk Oil in $7.5 bn deal

Total chief executive Patrick Pouyanne said at a press conference in Paris that the acquisition of Maersk would not have any impact on the plan to build the long-delayed export pipeline from Uganda across Tanzania to the Coast.

“We want to sanction this project in the first half of next year, following an inter-governmental agreement between Tanzania and Uganda earlier this month.

However, it might be possible to combine transportation of the Kenyan assets, a subject to be discussed with partner Tullow Oil,” Mr Pouyanne said, adding that the progress has been good, with an agreement already signed between Uganda and Tanzania early this month.

Total said the acquisition of Maersk could now allow the firm to participate in the development of the Kenyan assets.

Last year, Total used its influence, through several high level meetings with the presidents of both Uganda and Tanzania to successfully convince the Dar es Salaam and Kampala administrations to choose the Uganda-Tanzania route over Kenya’s route.

Kenya had sought to convince Uganda to move its oil through the Lamu Port, but after it lost out to Dar es Salaam, it announced that it would still proceed with the Lamu pipeline project. It is estimated the project would cost $2.5 billion with the government expected to offset part of it.

“We will now have to do the needful by identifying where this pipeline will pass and also address the financing question. We are only getting 20 per cent of the funding from the Exchequer. This means that the difference has to be funded under the public-private partnership,” Kenya’s Energy Cabinet Secretary Charles Keter said then.

Tullow Oil, which holds a 50 per cent interest in Lokichar exploration and the Kenyan government said it would be forging ahead with construction groundwork with works set to conclude in 2021. However, both have been quiet on the progress of this venture.

Total’s plan, if sanctioned, could save Kenya the $2.5 billion. But this would be at the expense of both national pride and the LAPSSET project, which had been envisaged to open up the northern part of the country that has remained underdeveloped.

Kenya says it is unaware of any preference by Total for the Kenyan oil to be moved through the Uganda-Tanzania pipeline.

“We are yet to get any notification from our oil development partners on this suggestion over a preferred route, so I cannot give a response to that,” Kenya’s Petroleum Principal Secretary Andrew Kamau said.

It is expected that the French conglomerate, with millions of dollars in its research and development budget, will lobby Kenya and Tullow to choose the Ugandan pipeline route as a cheaper option.

“For Kenya, the discussions on using the Ugandan pipeline will be a difficult as it is also keen on achieving other development objectives within its territory.

The French oil giants now effectively sees it as a partner in Kenya’s blocks 10BB, 13T and 10BA where it will now own 25 per cent interest, while Tullow retains a 50 per cent interest in the blocks, Africa Oil’s stake remaining at 25 per cent. GRAPHICS NEWS

However, if it can manage to have both the pipeline and production from the same company, then it has a best bet on price, especially when the revenues starts flowing in,” said Eric Musau, an analyst at Standard Investment Bank.

Uganda and Tanzania, together with the oil firms are working on the projects financing blueprint that will see the two countries raise 70 per cent of the total costs from international lenders.

Uganda has indicated that it will be able to determine its pipeline’s final cost before the end of this month, even as it emerged that one of the project’s lead financial advisers — Standard Bank Uganda [ a joint financial adviser with Japan’s Sumitomo Mitsui Banking Corp] — was already planning to raise $3 billion by the second half of next year.

“We are finishing on the details of the financing that will be contained on the Front End Engineering Design study which will be ready by the end of the month. Once we have the actual cost, then we will task our financial advisers to assist with fundraising,” Energy and Minerals Minister Irene Muloni said.


Total seeking Kampala-Dar pipeline route for Kenya oil
 
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