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AfrOil INVESTMENT AfrOil

Now that these hurdles have been cleared, from acquiring 100% of the former’s assets, and
Tullow will be in a position to complete the sale Ugandan government officials signalled their
of its Ugandan assets once it has “[completed] approval of the deal. They also expressed hope
certain customary pre-closing steps” with the that the project might reach the FID stage before
French major, the statement noted. the end of 2020 so that the fields could begin
“On closing, Tullow will receive $500mn production in 2024. That, in turn, would have
consideration and a further $75mn when a final allowed construction work on an associated
investment decision [FID] is taken on the devel- refinery to commence in the same year.
opment project,” it said. “In addition, Tullow According to previous reports, though, the
is entitled to receive contingent payments French company is not expected to take the FID
linked to the oil price payable after production until 2021 at the earliest. If so, the target date for
commences.” first oil will have to be pushed back until at least
Under its agreement with Tullow, Total will 2025, and work on the refinery will have to be
increase its stake in Blocks 1, 1A, 2 and 3A from postponed as well. ™
33.33% to 66.67%. Tullow has been serving
as operator of Block 2, while Total is already
operating Blocks 1 and 1A and China National
Offshore Oil Corp. (CNOOC) is operating
Block 3A. Development of these four blocks,
which contain the Kingfisher and Tilenga oil-
fields, is likely to require about $6.7bn worth of
investments.
Total has also acquired Tullow’s 33.3% stake
in the East Africa Crude Oil Pipeline (EACOP)
project. This link will be used to export most of
the crude extracted from the Ugandan fields,
which may eventually yield 230,000 barrels per
day (bpd). The French company will work with
Uganda and Tanzania to build the $3.55bn pipe-
line along a 1,445-km route from Hoima, a city
near Lake Albert, to Tanga, a port on the shore of
the Indian Ocean. When finished, the link will
be able to handle 216,000 bpd.
Tullow has been trying to scale back its
operations in Uganda for some time. Initially, it
sought to do so through a farm-out agreement
with its partners Total and CNOOC. However,
that deal fell apart, largely owing to tax disputes
with the government. As a result, the investors
missed their deadline for FID.
Then in April of this year, Tullow and Total
unveiled plans for the $575mn farm-out.
CNOOC opted not to block the latter company Production is expected to begin in 2024 (Image: Tullow Oil)

PERFORMANCE
Auditors raise questions about

NNPC’s status as a going concern

NIGERIA THE auditors of Nigerian National Petroleum company’s track record of financial losses and
Corp. (NNPC) have cast doubt on the state- of liabilities exceeding assets. The firm’s 2019
owned firm’s ability to continue as a going results were in line with this trend, they said.
concern. More specifically, they noted that NNPC
In comments made public after the publi- Group had recorded a net loss of NGN1.8bn
cation of NNPC’s Audited Financial Statement ($4.7mn) while NNPC Corp. recorded a net
(AFS) for 2019, the auditors – the international loss of NGN107.8bn in 2019. In the previ-
accounting giant PricewaterhouseCoopers ous year, NNPC Group’s net losses came to
(PwC) and Nigerian firms Muhtari Dangana & NGN803.1bn and NNPC Corp. reported a fig-
Co. and SIAO Partner – drew attention to the ure of NGN254bn, they said.

P14 www. NEWSBASE .com Week 43 28•October•2020