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Friday, February 14, 2014
Reports have Tullow Oil considering selling off another piece of its stake in Uganda, just as movement has been seen towards the development of the reserves discovered there. The company sold off two-thirds of its stakes in the East African country in 2012 to CNOOC and Total following governmental pressure.
The reasoning behind the possible sale is to focus on its assets in neighboring Kenya, where the government is seen to be more supportive in facilitating the discovered reserves toward development. Tullow, over the past few years, has seen nothing but delays in bringing its Ugandan reserves to market.
This is the first time the company has disclosed it could look to sell a share in one of its prized assets. The project has been delayed for years and has weighed on the share price while the company and its partners hammered out a development plan with the Ugandan government.
Tullow and partners struck an agreement with the Ugandan government on a development plan for the Lake Albert Basin last month after years of talks. But in the meantime, a project to develop Kenya’s South Lockichar Basin, which was discovered in 2012 – five years after the oil finds in Uganda – has steamed ahead.
Kenya “will be easier to develop and the government is very enthusiastic for us to get under way with that development and get first oil as soon as possible. So as we look at the phasing of our investments, there’s a lot of priority being given to Kenya. If it continues to be very material and grow then we may look to modify our holdings in Uganda,” Paul McDade told the Wall Street Journal.
Both projects are expected to be sanctioned in 2015/2016, with first oil expected in 2018/2019.
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