Uganda defers decision on Tullow's farmout arrangements

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 11 -- Uganda said it will defer for a month its decision over farmout arrangements for several oil blocks made between Tullow Oil PLC and potential partners Total SA and China National Offshore Oil Corp.

“Our expectation is that by April we will have finished our evaluation and that the government will give the go-ahead for the transactions to proceed,” said Kabagambe Kaliisa, the energy ministry’s permanent secretary.

“We have told everybody in the world that we are looking for strong investment in this sector. We are looking for companies that have strong market capitalization,” Kaliisa said.

The need for a decision arose after Tullow's preemption of partner Heritage Oil's stake in Blocks 1 and 3A along with the subsequent farm-out of stakes in Blocks 1, 2, and 3A to Total and CNOOC.

In February, Tullow indicated it planned to bring in a partner to help with development of the Ugandan assets and also with construction of downstream facilities, such as a refinery and a 1,200-km export pipeline (OGJ Online, Feb. 8, 2010).

The government’s decision partly confirms media reports this week quoting Tullow that Total and CNOOC were likely to buy a total of two-thirds of its Uganda oil assets under agreements with the local government to be signed in the next weeks.

Total and CNOOC presented their part of the proposals to the government last week and had been expecting a response by the end of March. But any disappointment on the part of the two firms has to be tempered by the perceived need of the Ugandan government to be seen as in control of the nation’s resources.

More to the point, according to analyst IHS Global Insight, “the Ugandan government is keen to ensure that it gets any reconfiguration of the development consortium (and its obligations) right at this stage, rather than rushing a decision that it will later come to regret.”

Uganda, Kenya discussions
Meanwhile, in a move that may have a significant effect on the negotiations, Uganda and neighboring Kenya have resumed discussion on the planned extension of the Mombasa to Eldoret oil products pipeline.

Most noteworthy, the two sides are reported to be discussing an option that would see the line reversed to allow passage of products from Uganda to Kenya. Such a reversal is in keeping with the wishes of Kampala, which has sought to have its oil refined in the country instead of merely exported.

In that connection, the Ugandan government last month let a contract to Foster Wheeler AG’s Global Engineering & Construction Group for a feasibility study of a 150,000-b/d refinery, which would be Uganda’s first (OGJ Online, Feb. 2, 2010).

Earlier, Tim O'Hanlon, Tullow’s vice-president for African business, underscored the importance of the refinery project, along with export pipelines, for Uganda’s aim.

“Uganda's oil basin development plan is an integrated project that requires building of a refinery that is linked with pipelines to supply local, regional and international markets," said O'Hanlon (OGJ Online, Sept. 17, 2009).

Contact Eric Watkins at

Related Articles

BG lets contract for seismic survey offshore Honduras

08/03/2015 BG International Ltd. Sucursal Honduras has let a contract to Fugro for an integrated multibeam echosounder survey and seabed coring project offsho...

Lime Petroleum due Norwegian Sea stakes

08/03/2015 Lime Petroleum Norway AS has agreed to acquire 50% of the PL760 and PL760B licenses in the Norwegian Sea from Enquest Norge AS. Terms weren’t repor...

US refiners continue consolidation, restructuring efforts

08/03/2015 Our previous installment on US refining industry concentration examined how frenzied mergers, acquisitions, other partnerships, and shutdowns that ...

AFPM Q&A-1: Safety, gasoline processing questions addressed at annual conference

08/03/2015 Gasoline processing operations, with a focus on safety, blending, and reforming issues, garnered considerable attention during the 2014 American Fu...

Kuwait lets contracts for grassroots refinery

07/31/2015 Kuwait National Petroleum Co. (KNPC) has let a series of contracts to groups of oil and gas service providers to build the planned 615,000-b/d Al-Z...

Junex spuds fifth well on Quebec’s Galt prospect


Junex Inc. has spudded the Galt No. 5 as a follow up to its Galt No. 4 that came in at more than 300 bo/d in January.

Joint venture advances plan for grassroots refinery in North Dakota

07/30/2015 Quantum Energy Inc., Tempe, Ariz., and a joint-venture partner Native Son Holdings LLC (NSH), The Woodlands, Tex., have filed a minor-source air qu...

Shell to shed Japanese refining assets

07/30/2015 Royal Dutch Shell PLC has entered a deal to sell nearly all of its interest in Japanese refiner Showa Shell Sekiyu KK to Idemitsu Kosan Co. Ltd. as...

BLM issues draft EA for Noble Energy’s latest DJ basin oil project

07/30/2015 The US Bureau of Land Management released a draft environmental assessment for Noble Energy Inc.’s proposal to develop as many as 89 oil wells in C...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts

Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected