Page 11 - AsianOil Week 22

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and purchase agreement (SPA) with Total. This cash consideration consists of $500mn payable
agreement extends to the tax treatment of the at completion and $75mn payable following FID
deal, “[including] the position on Ugandan tax [final investment decision] of the Lake Albert
on capital gains, which is to be remitted by Total Development Project,” Tullow said in April.
Uganda on behalf of Tullow Uganda, and which Tullow is taking this step within the frame-
is expected to be $14.6mn in respect of the cash work of a wider effort to reduce costs and stream-
consideration,” it said. line its portfolio. The company hopes to raise at
According to previous reports, Tullow last $1bn via sell-offs and will use the proceeds to
has agreed to sell its 33.3334% stakes in three improve its finances and reduce its debt burden.
oil-bearing blocks near Lake Albert and its The signing of the SPA should also serve
33.3334% stake in the proposed East African to tie up the loose ends left by the expiration
Crude Oil Pipeline (EACOP). The company has of Tullow’s previous farm-out deal with Total
been serving as operator of Block 2, while Total is and CNOOC in August of last year. The par-
operating Blocks 1 and 1A and CNOOC is oper- ties had negotiated a $900mn deal that would
ating Block 3A. have allowed Tullow to reduce its holdings in
Total has agreed to pay $575mn in cash for the Ugandan assets to about 11%, but they were
these assets and will also make oil-indexed con- unable to reach agreement with URA on the tax
tingent payments once production begins. “The treatment of the transaction.™

China’s oil demand reboundes

to near pre-pandemic levels

PERFORMANCE CHINA’S crude oil demand has almost com- independents, to ramp up crude runs,” Bloomb-
pletely recovered to pre-coronavirus (COVID- erg quoted Singapore-based Vortexa analyst
19) levels, according to both reports from Serena Huang as saying. “This crude import
industry analysts and new ship-tracking data. momentum could be rolling over to June if refin-
“The brisk resumption of Chinese oil ers’ appetites remain strong.”
demand, 90% of pre-COVID levels by the end of The country’s independent refiners had
April and moving higher, is a welcome signpost lifted run rates to about 76% of faceplate
for the global economy,” Reuters quoted IHS capacity at the end of May, compared with a
Markit vice-president and head of oil markets February low of 42%, data from industry con-
Jim Burkhard as saying on June 3. sultant SCI99 show.
He added: “When you consider that oil Wood Mackenzie anticipates the recovery
demand in China – the first country impacted will continue into the second half of this year,
by the virus – had fallen by more than 40% in forecasting that Chinese consumption would
February – the degree to which it is snapping grow by 2.3% year on year in the July-December
back offers reason for some optimism about period to 13.6mn barrels per day (bpd).
economic and demand recovery trends in other “China has led the demand recovery path
markets such as Europe and North America.” so far. Following this, other countries such as
Bloomberg reported on June 1, meanwhile, South Korea, Australia and Vietnam where the
that upwards of two dozen Suezmax tankers [virus] cases are broadly under check will see an
and very large crude carriers (VLCCs) were improvement in petroleum demand,” FGE ana-
anchored offshore China’s east coast waiting to lyst Sri Paravaikkarasu told Reuters.
offload an estimated 4mn tonnes (29.32mn bar- The International Energy Agency (IEA) is
rels) of oil to eager buyers. more wary, however, having projected in its May
“China’s demand recovery and current low report that Chinese demand will fall by 5% in the
oil prices have prompted refiners, especially the second half to 13.2mn bpd.™

Week 22 04•June•2020 www. NEWSBASE .com P11