Uganda has proven crude oil reserves of 6.5 billion barrels, about 2.2 billion of which is recoverable.
The International Monetary Fund was quoted in 2013 as saying that these reserves including those located in Buseruka Subcounty of Hoima District; are the fourth-largest in sub-Saharan Africa, behind Nigeria, Angola, and South Sudan.
Tullow Oil plc (“Tullow”) has on this day announced that the sale of its assets in Uganda to Total was completed with $500 million consideration.
Tullow is also due to receive a further $75 million when a Final Investment Decision is taken on the development project plus contingent payments linked to the oil price payable after production commences.
The closing of the transaction follows the satisfaction of all deal conditions, announced on 21 October 2020, which included the execution of the binding Tax Agreement, the approval for the transfer of Tullow’s interests to Total and the transfer of operatorship for Block 2.
Although Tullow will retain a financial link to the development project through the potential contingent payments, the closing of this transaction marks Tullow’s exit from its licences in Uganda after 16 years of operations in the Lake Albert basin.
Tullow now has a net debt of $2.4 billion and available liquidity of $1 billion. Rahul Dhir, CEO, and Les Wood, CFO, will lay out their plans for the Group in the coming years at a Capital Markets Day which is yet to take place on 25 November 2020.
Last month the president of Uganda H.E. Yoweri Kaguta Museveni and his Tanzanian counterpart H.E. John Pombe Magufuli agreed in principle to fast track the implementation of the East African Crude Oil Pipeline (EACOP) project in a bilateral meeting held in Chato, Tanzania after Uganda had signed the Host Government Agreement (HGA) with Total on the EACOP Project.
EACOP will become East Africa’s first major oil pipeline. The $3.5bn project will connect Uganda’s oil fields to port Tanga of Tanzania on the Indian Ocean for about 1,445 km (898 miles).