Tullow Oil exits Uganda
This should not come as a surprise for those who read my oil reports every Tuesday and Friday.
I have sometimes done my own analysis on oil outside of the reports I share from oilprice.com, Bloomberg and the Wall Street Journal.
I remember writing an analysis with the title of WHAT IS THE FUTURE FOR UGANDA OIL when I used to write the business column for The Insider in early 2015.
Tullow had just booked a loss of USD $14 Billion and it was blamed on exploration.
Some of you will remember that Tullow and Heritage Oil had offered to build a 20,000 barrels per day refinery for Uganda and both companies were going to pay for it.
Here is how Uganda government is a genius. The 20,000 barrels refinery was rejected and Uganda demanded for a 100,000 barrels per day refinery.
There is stupid and then STUPID. Since when can beggars be commanders?
Heritage Oil cut their losses and exited, leaving Tullow Oil holding the bag.
Tullow was then sued by the Uganda government for capital gains from what Tullow had bought from Heritage.
That lawsuit made no sense to me at all and I was shocked when Tullow lost the case. However, I only know Canada tax laws which say one gets taxed when assets are sold. But Tullow had just bought and had not sold. Likely maybe I need to research Uganda and UK taxation.
Let us return to the refinery. It does not exist. Its FEED is only now being bidded on. But the front runner to build the 60,000 barrels per day is a conglomerate with various players. The main one being GE (General Electric).
Please note this:
The oil refinery will start off in 2020 or 2021 processing 30,000 barrels per day. Then be expanded to 60,000 barrels per day in 2030.
GE new CEO is cutting the grease. GE is getting out of the Oil and Gas business and to date, they have laid off or plan to lay off 12,000 employees.
All car manufacturers are going clean energy. In fact, Total CEO said his next car is gonna be electric. Nice vote for Total Uganda.
Europe and China, even the Arab countries are putting in measures to go all electric cars with some European countries starting in 2020.
Martha Leah Nangalama
Exxonmobil employee with shares in Exxonmobil and Imperial Oil Ltd. XOM, IMO on the NYSE. All opinions are my own and do not reflect any company I am affiliated with.
KAMPALA (New Vision) – Tullow Oil is set to exit Uganda by June this year, the UK-based oil and gas company has revealed.
In a trading and operational statement update released on Wednesday, Tullow Oil said the farm-down in the country is on progress as the firm awaits Government’s approval of transactions with the other joint venture partner firms in Uganda.
“As previously disclosed, Tullow anticipates that the farm-down with Total and CNOOC (China National Offshore Oil Corporation) will complete in the first half of 2018, with cash payment on completion and payment of deferred consideration for the pre-completion period (including the whole of 2017) being received at this time,” the statement reads.
In oil and gas lingo, farm-down refers to when an exploration company sells its rights over discoveries to other companies, usually those that are bigger. Tullow Oil is a smaller company compared to the likes of ExxonMobil, Total and BP.
“The joint venture partners are also working towards reaching FID (final investment decision) in the first half of 2018, at which point Tullow’s second cash installment from the farm-down will be received. In line with its post-transaction status, Tullow has been reducing its operational footprint in Uganda and is now fully prepared for a non-operated presence only,” the statement says.
In the meantime, Tullow Oil Uganda, which opened shop in 2004, says operational activity is continuing as usual.
Tullow Oil Uganda has sold its assets to joint venture partners before. In 2012, Tullow sold 66.66% of its shares and remained with 33.33% stake in the the Exploration Area 2 (EA2) in the Albertine region.
A further 21.57% of shares were sold to Total E and P in January last year. British newspaper The Telegraph reported that this deal was $900m (about sh3.3. trillion).
Tullow Oil first discovered oil on the shores of Lake Albert in 2006. The first oil has been earmarked for 2020.