Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, Sept. 17 -- Tullow Oil Ltd. plans to sell part of its Ugandan assets to finance an oil pipeline project and other production infrastructure, according to state media.
Uganda’s state-owned New Vision newspaper said Tullow confirmed it would sell part of its wholly owned Block-2, to finance developments in the Lake Albertine basin.
“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 Tim O'Hanlon, Tullow’s vice-president for African business.
O'Hanlon said a joint venture undertaking is crucial because "we are an exploration and production company, but not in the pipeline or refinery business. …We need a partner with expertise in this area.”
He said Tullow has “received many interested firms, but we are still screening them with the government to get the right partner."
Uganda’s President Yoweri Museveni has said he will not allow international oil companies to refine the oil outside the country, saying it must be refined domestically to ensure that more profits are retained in the country.
Meanwhile, the discovery of oil in Uganda and plans to build a refinery could be delaying construction of the planned 320-km Eldoret to Kampala oil pipeline, according to a senior Kenyan ministry official.
Work has yet to begin on the pipeline, which was awarded to the Libyan-backed Tamoil East Africa in 2006, due to concerns that a refinery in Uganda will reduce profitability of their business and require more time to recoup their investment.
“The Libyans are asking for certain guarantees that should Uganda construct a refinery, it will in no way affect the pipeline usage,” said Peter Nyoike, Permanent Secretary in Kenya’s Ministry of Energy.
In June, Tamoil announced groundwork on the pipeline was expected to begin in July, with completion scheduled for 2011—4 years later than planned. Tamoil will hold a 51% stake in the pipeline, while Uganda and Kenya will jointly hold the remaining 49%.
Contact Eric Watkins at [email protected].
Photo from Petróleo Brasileiro SA.
Photo from ExxonMobil Corp.
