Tullow Oil has signed two new production sharing agreements (PSAs) with the government of Uganda, paving the way for completion of its asset sale to France’s Total and China’s CNOOC.
The new PSAs cover the EA-1 and Kanywataba licences in the Lake Albert Rift Basin. Tullow has also been awarded the production licence for the Kingfisher field, which is estimated to hold around 300 million barrels of oil.
Tullow said that as a result of the signing, it will now finalise arrangements with CNOOC and Total for completion of the farm-down and the related transfer of funds as soon as possible.
The signing of the PSAs will clear two hurdles that had been standing in the way of the $2.9 billion farm-down, moving one step closer to commercial production.
Uganda's oil minister Irene Muloni said Tullow had accepted the government's revisions to stabilisation clauses included in the contracts, which are designed to protect companies from future losses if the government alters tax legislation.
Commenting on the deal, Aidan Heavey, chief executive officer of Tullow, said: "Today's signing is a vital step towards the development of the Lake Albert Rift Basin and the oil and gas industry in Uganda and East Africa. I look forward to working in partnership with the government of Uganda and CNOOC and Total as we progress this world-class asset."
The deals are also said to include £6 billion of investment in a refinery and crude oil export pipeline.
It is hoped that the oil deposits and refinery will meet Uganda's needs as well as those of some neighbouring countries.
