Uganda Says Standoff With Oil Companies Will Delay Production
October 01 2019 - 7:29AM
Dow Jones News
By Nicholas Bariyo
KAMPALA Uganda--Continuing lengthy negotiations with investors
may push back Uganda's oil production but Kampala remains committed
to ensure that it gets "optimal value and benefit from the
commercialization of East Africa's largest undeveloped crude
assets," Uganda's energy and minerals ministry said Tuesday.
A $900 million failed deal by the U.K.'s Tullow Oil PLC (TLW.LN)
to sell its stake in the assets to France's Total SA (FP.FR) and
China's Cnooc Ltd. (0883.HK) has stalled some operations, including
work on a 900-mile export pipeline, but the government wants to
ensure that investors undertake projects that give "a reasonable
return on investment," it said.
"The projects that are to be sanctioned for close to three
decades and their impact should last beyond their lifecycle for
current and future generations," said Robert Kasande, permanent
secretary at the ministry.
Tullow announced last month that it would begin a new process to
reduce its stake in the 230,000 barrels of oil-a-day project after
failing to reach a tax deal with authorities. The standoff has
since forced investors to pause some development activities and lay
off workers but the government insists that any sale must fulfill
Uganda's tax obligations.
Mr. Kasande said that the spat will inevitably affect the final
investment decisions for the projects, which were expected in the
course of this year. Although the most recent government estimate
had hoped that oil production would start by 2022, it is now
unlikely. This is the latest hurdle for the future oil producer,
which has already pushed back the production timetable multiple
times.
"The government will continue to engage and support the oil
companies to resume and continue with activities on all the
projects together with all stakeholders to find optimal and lasting
solutions, "Mr. Kasande said.
Company officials could not offer an immediate comment.
Write to Nicholas Bariyo at Nicholas.Bariyo@wsj.com
(END) Dow Jones Newswires
October 01, 2019 07:14 ET (11:14 GMT)
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