The plot thickened in Uganda last week when word emerged that Italy's Eni SPA is seeking a meeting with President Yoweri Museveni over its interest in the country's oil licenses in the Lake Albertine Graben.
In case you've forgotten, a year ago Heritage Oil PLC agreed to sell its Ugandan interests—a 50% working stake in Blocks 1 and 3A, which cover the northern and southern end of Lake Albert—to Eni for as much as $1.5 billion.
"We have decided to enter into this letter of intent with Eni as we recognize the very large multibillion dollar investment that is required to develop the Albert basin and the related infrastructure," said Heritage Chief Executive Officer Tony Buckingham (OGJ Online, Nov. 29, 2009).
Exit, stage left
Barely 2 months later, though, an Eni spokesman announced that the Italian firm "revoked the sale and purchase agreement signed on Dec. 18 for the acquisition of Heritage's 50% share in Ugandan Blocks 1 and 3A…."
Heritage said the termination followed Tullow Uganda Ltd.'s exercise of a preemption right with respect to the transaction. That right put Tullow in the position of being the sole owner of Blocks 1, 2, and 3A, which hold reserves estimated at more than 1 billion bbl of oil.
Then a funny thing happened on the way to the bank. In August, Tullow said it expected "some slow down in activity" in its effort to develop assets in the Lake Albert Rift basin due to an unresolved dispute over capital gains tax (CGT) between Heritage the government of Uganda (OGJ Online, Aug. 27, 2010).
Back then, analysts expressed considerable concern over the effect of the impasse. One of them, Dougie Youngson, at London-based Arbuthnot Securities Ltd., very neatly summed up the problem and its effects.
A revenge drama?
"The CGT issue needs to be resolved before we are likely to see any further activity and this could have a major impact on the valuation of these assets should the situation continue for a prolonged period of time," Youngson said in a research note.
Well, it's been a few months since then with little or no progress on the fields or in the boardrooms. Heritage's Uganda stakes remain up in the air, along with plans for Total SA and CNOOC to farm in under an agreement worked out with Tullow.
Meanwhile, Uganda's Energy Minister Hilary Onek said Eni wrote to the president's office early last month expressing its continued interest in the country's oil sector—and the president has already agreed to meet the company.
Does it sound like an Italian revenge play? That might be overly dramatic, but still….
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