Business News


Tullow Sells Its Oil Stake at $900 Million


Tullow oil says it is to sell part of its oil stake in a Ugandan oil project to Total at of $900 million amounting to over 3.2 trillion shillings.

A statement by Tullow Oil Chief Executive Officer, Aidan Heavy on Monday said Total will acquire a 21.6 per cent stake in the Lake Albert Development project.

The deal according to Heavy will see Tullow transferring 21.57% of its 33.33 interests in Exploration area 1,1A, and 3 A t Total.

The sales purchase agreement signed on 1st January this year allows Tullow to retain an 11.76% interest in the upstream and pipeline, which would reduce to 10% when the Government of Uganda formally exercises its right to back-in.

This agreement is based on the transfer of licence interests from Tullow to Total in exchange for cash and deferred consideration to be paid as and when the Lake Albert Development Project reaches a series of key milestones and represents a reimbursement by Total of a portion of Tullow's past exploration and development cost.

According to the agreement, Total will pay $200 million in cash consisting of $100 million on completion of the transaction and $50 million at both Final Investment Decision and First Oil.

The Lake Albert Development Project is a major development which expects to achieve around 230,000 bopd when it reaches plateau.

Development Plans were approved by the Government in August 2016 which Tullow expects will require $5.2 billion gross of upstream capex to develop the first 1.2 billion barrels of oil with $3 billion expected to be required to reach First Oil around three years after Final investment Decision.

The Government of Uganda has agreed an export route through Tanzania and the current estimate for the pipeline capital cost is around $3.5 billion. The pipeline is expected to be funded through a combination of debt and equity.

Tullow carries approximately $1.7 billion for Uganda which includes fair value allocations and capitalised interest. The Group expects a pre-tax write-off as a result of this disposal of approximately $0.4 billion to be booked in its 2016 Full Year Results.

Completion of this transaction is subject to certain conditions, including the approval of the Government of Uganda. Once this transaction has completed, Tullow will cease to be an operator in Uganda but will retain a presence in-country to manage its non-operated position.

Aidan Heavey said the agreement will allow the Lake Albert Development to move ahead swiftly, increasing the likelihood of Final investment Decision in 2017 and First Oil by the end of 2020.

He said he is particularly pleased that Tullow's long-term commitment to and presence in Uganda is guaranteed by this transaction and that we will remain an active investor in Uganda's oil and gas sector.


Kitgum Residents Waiting for UNRA Compensation



Over 20 people affected by the road construction works in Kitgum district are still waiting for their compensation, a year after the Uganda National Roads Authority (UNRA) issued them with payment vouchers.

UNRA was meant to compensate people affected by the ongoing construction of the Acholibur-Musingo road.

Some of the affected persons who spoke to Uganda Radio Network have payment vouchers dating back to October and November 2015 but have not seen a shilling deposited on their accounts since them. Payments for other affected persons was done within two weeks of the issuance of their payment vouchers.

Geoffrey Onen, one of the affected persons says the payment officers told them to expect their money on the account two weeks from the date of issue of the vouchers but after several printouts of their bank statements, he has not seen any money for his property.

Onen's property valued at 2.7 million shillings in Labong Layamo Sub-County, has since been destroyed leaving him and his new wife to survive on less than an acre of land. Onen has resorted to doing petty gardening jobs to survive because his source of livelihood was taken away from him.

Eugene Okech, another affected resident is still expecting 4.5 million shillings in compensation for his property since he was issued with a payment voucher on November 11, 2015.

All the payment vouchers seen by PRIME RADIO were issued by Katuramu & Company Advocates on behalf of UNRA and counter signed by Nicholas Ssali. No bank deposit slips are issued to the victims of the construction works.

Richard Kalyango, the UNRA contractor for the Compensations says the allegations merit an independent investigation because; payment vouchers cannot be issued without money being deposited on the respective accounts of the affected persons.

Other residents suffering the same fate include Odera Alfred, Abur Tabiza, Langoya Basir, John Oloo, Kilama Walter and Opira David. Also on the list are Okot Johnson, Opio Galdino, Okot Wiyilit, Laker Ejeriya, Ojera Alex, Can-rom Joseph and Too-rac Denis among others.

William Komakech, Kitgum Resident District Commissioner (RDC) wants the matter taken over by the police and investigated until the irregularities are fully explained.



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