By Samuel Muhimba
British oil explorer Tullow Oil has announced completion of sale of its assets in Uganda to French Oil giants Total E&P in a deal worth $575 million (about Shs 2.231 trillion) bringing an end to its 16 years’ operations in the country.
According to Tullow, $500 million was received today while it 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 our transaction with Total clearly evokes mixed emotions within Tullow. While we are sad to be exiting Uganda after many years, the $575 million of proceeds form an important part of our plan to strengthen Tullow’s balance sheet and improve our financial position,” said Tullow’s CEO Rahul Dhir while commenting on the deal.
“We will watch the progress of Uganda’s oil & gas industry with much interest and all of us at Tullow wish the people and government of Uganda and our former joint venture partners every good fortune as they take this important project forward.” Rahul added.
In October, Government okayed Tullow Oil to sell all its stake in Uganda’s oil and gas sector to Total. The company had in April agreed to sell its onshore oil fields in Uganda to Total as part of its efforts to raise $1 billion this year to reduce its $2.8 billion of debt.
The deal means Tullow’s interests and operatorship for Block 2 will be transferred to Total.
Tullow also says it 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.