The Italian energy giant Eni has agreed to buy Heritage OilÔÇÖs Ugandan interests for up to ┬ú903 million, it has been revealed.
The deal will comprise £813 million in cash and an additional payment of £90 million or an interest in a field independently valued at the same amount within two years.
Jersey-based Heritage had originally been going to merge with the Turkish oil giant Genel, but walked away from the $6 billion deal, choosing instead to sell its 50 per cent stakes in Blocks 1 and 3A of the Lake Albert Basin in Uganda.
London, UK-based Tullow Oil owns the other half of the two Heritage fields, in addition to another whole block.
Since drilling started in the Lake Albert area in 2005, over 700 million barrels of oil have been discovered, with Tullow predicting as many as 1.5 billion to follow.
It is believed that Heritage no longer wanted to fund the infrastructure works associated with developing the fields further, which included a £2 billion pipeline connecting the fields with the east coast of Africa and a £5 billion refinery.
Bids for TullowÔÇÖs assets are expected in the New Year, with the Heritage-Eni deal expected to close within the first quarter.
It is believed that Rome-based Eni has already been negotiating with the Democratic Republic of Congo to secure areas on the other side of Lake Albert that lie next to those in Uganda.ÔÇ£The development of these resources will require great synergy with Uganda's infrastructure programs, in respect of which Eni intends to play a leading role in partnership with the Authorities,ÔÇØ Eni said in a statement.ÔÇ£The transaction is part of Eni's growth strategy in the African continent and in the Sub-Saharan region in particular, where the company is committed to pursuing an approach of sustainable development through its staff, expertise and technologies.ÔÇ£Eni considers Uganda, which has achieved economic growth through effective policies, an ideal partner for the development of cooperation programs aimed at sustaining the region's social, economic, and industrial development.ÔÇØEni, which is 30 per cent owned by the Italian government, is one of EuropeÔÇÖs most cash-poor international oil companies.It is therefore keen to establish itself in exploration and production, particularly as its flagship project in Kazakhstan, the Kashagan field, has run into operational difficulties and delays.
Eni is also currently involved in boosting the production of the Zubair oil field in Iraq, the countryÔÇÖs fourth-largest with a current output of 200,000 barrels a dayÔÇöa project with an estimated cost of $20 billion.
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