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CNOOC Will Not Take Part of Tullow Oil Interest in Lake Albert Basin

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In a statement on Thursday morning, Tullow said “in a notice received on 26 May 2020, CNOOC informed Tullow and Total that it has elected not to exercise its pre-emption rights.” It added that “Accordingly, there are no changes to the previously announced transaction or timeline and Tullow continues to expect the transaction to complete in the second half of 2020.”
Total E&P becomes the majority player in the Lake Albert Basin oil finds
The China National Offshore Oil Company (CNOOC) will not buy part of Tullow Oil’s interest in the Uganda oil sector, leaving French firm Total E&P to take all of it. This clears a major hindrance that would have delayed the progress of the transaction that could be a decider whether Uganda’s oil sector moves faster or stalls.

Tullow announced last month that it had agreed to sell its entire stake to Total E&P but CNOOC had pre-emptive rights to take 50 per cent of that.

In a statement on Thursday morning, Tullow said “in a notice received on 26 May 2020, CNOOC informed Tullow and Total that it has elected not to exercise its pre-emption rights.” It added that “Accordingly, there are no changes to the previously announced transaction or timeline and Tullow continues to expect the transaction to complete in the second half of 2020.”

This means the transaction will go on unhindered and makes Total E&P the biggest player in the country’s oil industry.

Effective January 1, 2020, Tullow says, Total will now be the owner of its entire interests in Blocks 1, 1A, 2 and 3A in Albertine region Uganda and the proposed East African Crude Oil Pipeline (EACOP) System (the Uganda Interests) to Total Uganda.

Total Uganda will pay USD 575 million (2.2 trillion Shillings) plus potential contingent payments after first oil. Tax on the deal, also called capital gains tax, is 55.6 billion Shillings (USD 14.6 million) and will be remitted by Total Uganda on behalf of Tullow Uganda.

The deal collapsed last September because the companies could not agree with the government on taxes and recoverable costs. On CNOOC’s next step, some sources  suggest that it could be eying new blocks that the government put up for exploration this year.

CNOOC remains with a 33.3 per cent stake in the Albertine region, while Total E&P now owns 66 per cent of the stake in the Lake Albert Basin.

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