Uganda halts Tullow’s plan to sell oil blocks

12 October 2011, Sweetcrude, Kampala – Ugandan lawmakers voted on Tuesday for the government to delay its approval of Tullow Oil’s proposed sale of three oil blocks in Uganda to Total and China National Offshore Oil Corporation (CNOOC).

The deal is enmeshed in a revenue dispute and graft allegations. But, the UK independent had earlier denied allegations that it paid several Ugandan officials to sway key decisions over its licences in the African country.

The new delay follows a move by Ugandan President Yoweri Museveni last month to block the signing of the $2.9 billion farm-down agreement for the three Albertine Graben blocks, originally scheduled for 15 September.

Lawmakers across political divide voted to support the motion compelling the government to stay its approval of the deal in an emergency session.

A moratorium has also been imposed on the signing of new deals in the oil sector until an energy bill is passed to regulate management of the sector ahead of production.

The vote puts Tullow’s deal with the two companies on ice pending an investigation into the bribery allegations.

In a letter addressed to the parliamentary speaker, Tullow ‘s chief executive Aidan Heavey wrote the company “rejects the outrageous and defamatory accusations of corruption” made against it in the Ugandan Parliament during the debate on Monday evening.

Ugandan Prime Minister Amama Mbabazi, one of the government officials implicated in the bribery claims, read the letter on the floor of parliament during an emergency session to discuss oil issues in the country.

“Tullow will examine all possible legal action to protect the reputations of the company and its employees,” the Tullow boss stated in the letter.

The letter was responding to allegations from Gerald Karuhanga, a lawmaker who presented a number of documents in the house on Monday, accusing Tullow of wiring millions of dollars of money on accounts of several government ministers before buying Heritage Oil’s stakes in the country and subsequently agreeing to sell two-thirds of its stakes in the three blocks – 1, 2 and 3a – to France’s Total and Chinese state-owned CNOOC.

The planned disposal of the three blocks has also snagged on a proposed stabilization clause in the sale agreement, which could restrict Uganda’s share of oil revenue if prices increase significantly after production comes on stream.

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