Uganda oil firms ready to resume operations


Uganda oil firms which abandoned oil infrastructure projects following tax payment disagreements with the Uganda Revenue Authority, now say they are keen to resume operations.

The companies have caved in to pressure and proposed fresh dialogue to resolve the current standoff with the government, after a month of suspending all technical activities in Uganda’s budding oil and gas sector.

British multinational Tullow, French oil major Total and China National Offshore Oil Company (CNOOC), the joint venture partners in Uganda’s oil development, are expected to present their new position which will form a basis to start fresh negotiations.

“The idea is that we need to have continued communication with the authorities to understand each other. We respect the frustrations of government and we believe they can imagine our situation. We have spent a lot of money already, $3.2 billion jointly with our partners,” said Total E & P general manager in Uganda, Pierre Jessua.

President Yoweri Museveni has criticised the oil multinationals, accusing them of coming up with new demands even after the government had invested billions and changed laws to accommodate them.

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Total E&P, the East African Crude Oil Pipeline project leader, halted all technical activities related to the establishment of an export pipeline and upstream operations in September following the unsuccessful sale of Tullow Oil’s 21.57 shares. The company said it could not continue to spend money on technical teams when there was no clarity on the way forward.

“It is premature to say we could do this or that. We have the Tullow deal terminated it means we are back into a shareholder configuration where each of us owns 33.3 per cent. The deal is now in the past so, we need to sit together first as joint venture partners and discuss next steps before we speculate because anything can happen,” said Mr Jessua.

The sale of shares was expected to give Tullow the cash it needs to invest in other projects outside Uganda and reduce its current debt burden. According to Tullow’s Annual Reports and Accounts 2018, the company debt was $3.1billion.

Total says it remains open to exercising its pre-emptive rights should Tullow find an alternative buyer.
The industry service providers who have been making financial investments in preparation for taking up job opportunities that come with oil production are also frustrated. Like the companies, they are also calling for fresh dialogue.

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