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AfrOil COMMENTARY AfrOil
The latest announcement will come as little surprise to keen Angola watchers, though con- sidering the project’s patchy history, there is less certainty surrounding what comes next.
Most intriguing will be the long-awaited award of contracts for the development of the Lobito re nery, which has also su ered a similar stop-start timeline.
However, much like the Dangote
Group-backed facility under construction in Nigeria, the scale of the Lobito unit means that its completion would be instantly transforma- tional for the host country and turn it from an importer of petroleum products into a signi - cant exporter.
With the Cabinda, Lobito and Soyo facilities all due to come into operation by 2025, further announcements should be forthcoming.
INVESTMENT
Tullow backs out of Ugandan farm-in deal with Total and CNOOC
THE UK-Irish company Tullow Oil has ter- minated a farm-in deal with France’s Total and China National O shore Oil Corp. (CNOOC) for the Lake Albert project in Uganda.
In a statement dated August 29, the company said it had taken this step because it had not been able to reach agreement with the Ugandan gov- ernment on how to tax the transaction. With- out a deal on taxation, it explained, the parties could not meet all the requirements for extend- ing their sales and purchase agreements (SPAs), even though they had all agreed on previous extensions.
According to Tullow, the sticking point was the question of whether the Ugandan Revenue Authority (URA) was willing to grant Total and CNOOC a concession on the capital gains taxes to be paid for the sale. “While Tullow’s capital gains tax position had been agreed as per the group’s disclosure in its 2018 full-year results, the Ugandan Revenue Authority and the joint venture partners could not agree on the availa- bility of tax relief for the consideration to be paid by Total and CNOOC as buyers,” it said.
The company also indicated that it still intended to trim its stake in the Ugandan licence area in order to raise funds to cover the
costs of development, including the construc- tion of infrastructure facilities such as an export pipeline. “Tullow will now initiate a new sales process to reduce its 33.33% operated stake in the Lake Albert project, which has over 1.5bn barrels of discovered recoverable resources and is expected to produce over 230,000 barrels per day (bpd) of oil at peak production,” it said.
In its statement, Tullow did not divulge any details of the new sales process. But it did indi- cate that it did not expect to make much progress before the end of this year. “ e joint venture partners had been targeting a nal investment decision [FID] for the Uganda development by the end of 2019, but the termination of this transaction is likely to lead to further delay,” it commented.
Tullow has been in negotiations with Total for several years. In January 2017, the two com- panies signed a purchase agreement that pro- vided for the French company to pay $900mn for a 21.57% stake in the Lake Albert block, which includes Exploration Areas 1, 1A and 2. en in February of the same year, CNOOC, which was already a shareholder in the project, exercised its pre-emptive rights and claimed half of the equity stake set aside for Total.
Tullow Oil
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