China National Offshore Oil Corporation (CNOOC) has announced that it will not be exercising its right to preempt the sale of Tullow Oil’s entire in Uganda’s oil blocks to Total.
Last month, Tullow sold off all its interests in Blocks 1, 1A, 2 and 3A and the proposed East African Crude Oil Pipeline (EACOP) system to Total E&P Uganda for a cash consideration of US$575m plus potential contingent payments after first oil.
However, CNOOC, which is the third company operating in the oil company operating in the Albertine Belt had rights to preempt and acquire up to 50 per cent of these assets on the same terms and conditions as Total.
However, this morning, Tullow announced that the Chinese company had told them and Total that it has elected not to exercise its preemption 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,” Tullow announced.
CNOOC’s possible intervention has been one of the few remaining hurdles for this deal to be completed.
Nonetheless, the transaction remains subject to a number of conditions including approval by Tullow’s shareholders, customary government and other approvals and the execution of a binding agreement with the government of Uganda and Uganda Revenue Authority that reflects the agreed tax principles previously announced.
Tullow said today that they will now look to progress the tax agreement following CNOOC’S decision not to preempt.
The government of Uganda has already welcomed the sale deal being eager to getting to the Final Investment Decision (FID).
Energy and Mineral Development Minister, Ms Mary Goretti Kitutu, Kimono, recently described the farm out deal as a significant milestone in Uganda’s oil and gas sector.
“It is a critical development that takes the sector towards the Final Investment Decision (FID) that the country is eagerly waiting for,” the minister said.