This agreement satisfies the Ugandan authority’s taxation concerns and enables Tullow, China National Offshore Oil Corporation (CNOOC) and Total SA to proceed with the basin-wide development with the full support and commitment of the Ugandan government.
The memorandum provides a process which both parties say will result in a resolution of the impasse created by the Heritage and Tullow tax situations some time back.
More importantly, it allows Tullow to proceed with the development of the major Kingfisher oil field and with developing the oil industry in Uganda.
In a statement, Tullow said it considers the signing of the memorandum “to be a huge achievement and looks forward to working closely with the Government of Uganda over the coming years, in conjunction with CNOOC and Total, in developing the Ugandan oil and gas sector.”
The memorandum clears the way for the Irish-led exploration group to start a joint venture with Total and CNOOC.
The signing follows a tax dispute with the government that has delayed Tullow’s plan to develop the East African nation’s oil industry with its partners.
Tullow will pay the Ugandan government $469 million (€355m) within 10 days in respect of the acquisition of assets from Heritage Oil, Energy Minister Hillary Onek said at a signing ceremony in Kampala yesterday.
The government will also receive $472m in taxes from the sale of Tullow’s interests to CNOOC and Total.