9 December 2011, Sweetcrude, NEW DELHI – The Ugandan government is likely to approve Tullow Oil’s assets sale plan in the East African country in the next seven weeks, the country’s oil minister has said.
The UK firm plans to sell one-third in each of its assets in Uganda to China National Oil Corporation and France’s Total in a deal worth $2.9 billion, and has, indeed, been waiting since last year for approval for the deal.
“This week we have asked them to furnish some information in two weeks,” Irene Muloni, Ugandan oil minister, told reporters at the India-Africa hydrocarbon summit in New Delhi.
Asked if the farm-down could be approved by the end of January, she said: “Once they provide the information then we should be able to discuss it. It could be earlier than that.”
Uganda President Yoweri Museveni last month indicated to parliament he is not likely to delay approval of the tie-up any further, because it would diminish his government’s credibility in future negotiations.
Muloni also said the government was not considering an out of court settlement with British explorer Heritage Oil over a tax dispute.
“They are the ones who chose for arbitration. We have to attend (and) defend,” the minister said.
The dispute centres on tax claimed by the government on the $1.45 billion Heritage Oil made from the sale of its Ugandan assets to Tullow Oil last year.
Last month Heritage said it would launch an appeal against a Ugandan tribunal which has ruled the company is liable to pay $404 million in capital gains tax, as part of a year-long row over the tax bill.
Uganda, which is east Africa’s third largest economy, discovered commercial deposits of hydrocarbons in its west along the border with the Democratic Republic of Congo in 2006. Production is expected to start early next year.
Tullow says it has found 1.1 billion confirmed barrels of oil and believes there are 1.4 billion barrels left to find, while a Ugandan energy ministry official says 2.5 billion barrels of oil are confirmed in place, of which between 1 billion to 1.2 billion barrels are recoverable.