Tullow Oil announced last week that its request for the sale of its interests in Blocks 1, 1A, 2 and 3A in Uganda to French major Total was approved by the requisite majority of its shareholders. The vote was held during a General Meeting on July 15. The transaction also comprises entire interests in the East African Crude Oil Pipeline System project, currently under development.
Through the sale, the Irish independent oil and gas company will receive an initial payment of $500 million, and the remaining $75 million will be attached to the final investment decision to be taken on the project. Furthermore, Tullow will receive conditional payments linked to oil production, activated once Brent prices surpass $62 per barrel.
To be fully completed, the transaction needs to meet a number of other conditions such as customary government approvals, as well as the execution of a binding tax agreement with the Ugandan Government and the Uganda Revenue Authority.
Total has been present in Uganda since 1966 through its marketing operations, and the group holds more than 20% of the market share.