Tullow Oil has won a ruling at London’s Court of Appeal allowing it to keep the majority of a $346m (€257m) tax payment relating to a Ugandan asset deal completed four years ago.
Arising from its 2010 purchase of 50% of Ugandan assets held by Canadian firm Heritage Oil & Gas, Tullow shouldered a hefty capital gains tax bill which Heritage had refused topay.
The High Court in London ruled last year, that Heritage should repay Tullow almost $346m to cover the tax paid. Yesterday’s ruling upheld that position, after Heritage had appealed.
Tullow, however, will have to pay Heritage $2.5m after one of the three points appealed by Heritage was accepted.
The Irish-founded exploration firm is already preparing to challenge an unrelated capital gains tax ruling — by Uganda’s Tax Appeals Tribunal — suggesting it owes a further $260m in unpaid tax regarding the eventual farm-down of the same assets it acquired from Heritage.
Tullow farmed-out 66% of said assets to Chinese State oil firm, CNOOC and French utility, Total in 2012.
Meanwhile, a report into the pan-African oil and gas sector — undertaken by PwC South Africa — suggests an industry in “substantial” growth mode, but dogged by regulatory uncertainty and in some areas, corruption.
“Regulatory uncertainty and delays in passing laws are severely inhibiting sector development in many countries around the continent.
“Some key players have delayed or cancelled projects until further clarity can be sought in their respective jurisdictions, as they cannot move forward with ‘doubts’, given the long-term nature of the needed investments,” according to PwC Africa Oil & Gas advisory leader, Chris Bredenhann.
Although Africa has proven natural gas reserves alone, of 502 trillion cubic feet, PwC said that the major challenges facing oil and gas explorers operating on the continent have remained largely unchanged and are dominated by uncertain regulatory frameworks, corruption and poor physical infrastructure.
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