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Tullow's Uganda Deal Approved by Ruling Party

Source: Reuters 10/24/2011, Location: Africa

London-listed Tullow Oil's proposed sale of stakes in its Ugandan oilfields was given the go-ahead by the country's ruling party parliamentary caucus, despite its parliament voting to delay the deal. David Bahati, chairman of the ruling National Resistance Movement (NRM) parliamentary caucus, told Reuters it agreed last week that Tullow Oil's deal was already underway and that it could not be stopped, allowing President Yoweri Museveni to endorse the deal.

On Oct. 11, parliament passed a resolution asking the government to withhold consent for Tullow's sale of stakes to France's Total and China's Cnooc until necessary oil laws are in place. Parlimentary resolutions in Uganda are only advisory to the executive arm of government.

"The caucus received a briefing from cabinet on the implications of resolution 10 and we were unanimous that stopping Tullow's transaction had big implications," Bahati said. "So we resolved that this was already an ongoing transaction and that government should conclude it but we concurred with parliament on a moratorium on new agreements."

Tullow agreed last year to sell stakes in its Ugandan assets to Cnooc and Total for $2.9 billion but the company has been awaiting final government approval. Approval of the deal is expected to unlock a $10 billion investment to develop the oil sector into production phase. After the vote in parliament, Museveni, who says he has to personally sign off on all the country's oil transactions, said he would first discuss the situation with his party before deciding whether to delay the Tullow deal.

The east African nation discovered hydrocarbon deposits in the Albertine rift basin along its border with the Democratic Republic of Congo in 2006 and production was expected to begin early next year. Reserves in the entire basin are estimated to be as high as 6 billion barrels although only 2.5 billion barrels have been confirmed.

Uganda's energy ministry says it expects to send three petroleum bills to parliament by the end of the year as the government moves to put laws in place quickly to regulate the nascent oil sector before production begins.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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