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    Tullow in Uganda Farmout to Total

Summary

Total is to increase its stake in the Uganda Lake Albert oil project to 54.9%, as a result of a farm in from Tullow.

by: Mark Smedley

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Tullow in Uganda Farmout to Total

Tullow Oil said January 9 it has agreed to transfer 21.57% of its 33.33% interests in Uganda blocks 1, 1A, 2 and 3A to Total, effective Jan.1 2017, for a total consideration of $900mn as part of a major upstream oil-only development. However gas could become part of the wider picture later on.

Tullow will retain an 11.76% interest in the upstream and pipeline, reducing to 10% when the Ugandan government exercises its right to back in. 

Total said upon completion it will hold a 54.9% interest, paving the way for a project sanction in the near future. It said overall consideration to Tullow would be $900mn, representing a reimbursement of a portion of past costs in instalments along the development, with an initial $100m paid at closing.

The Lake Albert, Uganda oil-only development project is expected to reach 230,000 b/d at plateau post-2020 and require $5.2bn of gross capital upstream investment. CNOOC is the project's other key investor.
 
Last year Uganda agreed an oil export pipeline route through Tanzania, the current total estimated cost of which is around $3.5bn. 
 
Subsequently, Tanzania mooted that it would be willing to develop a gas pipeline in the opposite direction. However, it is unlikely to have enough deepwater gas to export to landlocked Uganda until the mid-2020s, and only then if resource holders like Shell and Statoil see it as in their interest to market gas inside east Africa – rather than their main objective of monetising such gas as LNG.

 

Mark Smedley