By Rogers Wanambwa
KIU, Main Campus - Following an announcement on April 23, 2020, by Tullow Oil that it had agreed to sell its assets in Uganda to Total and that CNOOC, the other company with interests in Uganda's oil had rights of pre-emption to acquire 50% of these assets on the same terms and conditions as Total, it announced last week that CNOOC Uganda Limited had informed them(Tullow Oil and Total) that it will not pre-empt the sale.
Total is now set to acquire all Tullow Oil's 33.3334% interests in Blocks 1, 1A, 2 and 3A in Uganda's Lake Albert development project and Tullow Oil's interests in the proposed East Africa Crude Oil Pipeline(EACOP). All this at a consideration of USD575million(approximately UGX2.2trillion).
"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," read a media statement released by Tullow Oil on May 28, 2020.
This brings to an end, a transaction that started in January 2017, when Tullow Oil attempted to sell 21.57% of its 33.33% in Exploration Areas 1, 1A, 2 and 3A in Uganda to Total for a consideration of $900million.
The deal was dropped after CNOOC Uganda Limited exercised its pre-emption rights to the deal.
In August 2019, Tullow Oil announced that farm-down had been terminated as the Sale and Purchase Agreements(SAPs) between the parties had expired.
It is thought that Tullow Oil experiencing a USD1.6billion loss in 2019 is part of the reasons it has now moved to sell all its interests in the project for $325million less than what it had asked for, for an even less percentage of those interests.
Source: CEO magazine
Picture credit: Softpower news