Kampala — The Italian company, Eni SpA (E) is looking at a large amount of Tullow Oil confidential data as part of its due diligence process for buying a stake in Uganda's oil ventures.

Tullow is seeking partners to extract oil it discovered during exploration in the western Uganda Lake Albert region. It hopes to sell off half its stakes in two Ugandan oil fields.

Analysts estimate that the company could pocket US$1.5 billion (Approx. Shs 3 trillion) from the sale. That money is equal to about half of the Uganda national budget for FY2009/10 which is Shs7.3 trillion.

The confidential information is in the so-called "Data rooms" which Tullow has opened to potential buyers. The Data rooms are used when a vendor or seller wishes to disclose a large amount of confidential data to proposed bidders, typically during the due diligence process.

ENI, which is Italy's largest industrial company, is 30% owned by the government. It operates in 70 countries including Libya, Nigeria, Congo, Mozambique, and Angola in Africa. It is also the third largest refiner in the world after Royal Dutch Shell and Total S.A.

Tullow's chief executive Aidan Heavey has said the company has already put together a list of about 10 companies that have pre-qualified for bidding. It has appointed Standard Chartered to sell half its stake. Tullow is hoping to choose a buyer by the end of the year.

Interested companies are still secret and ENI is the only one to come out openly. Other mentioned without confirmation, however, include CNPC, Sinopec, Total, KNOC, StatoilHydro.

On Oct. 23 the US-based business news wire service, Bloomberg, reported Tullow saying the Uganda government had approved an initial list of companies interested in bidding for a stake in its projects.

"We've been really open with them about the process," Tullow director of exploration Angus McCoss said of the government. A partner will need to be able to fund and manage infrastructure projects such as building a pipeline to Kenya's port of Mombasa and Uganda's first refinery, he said.

President Yoweri Museveni recently announced plans to build a mini-oil refinery. Uganda has two billion barrels of confirmed oil reserves. A large area with potential reserves remains unexplored.

Tullow said in March it planned to produce its first oil in Uganda in early 2010 and start exports through Kenya in about five years. Production will be 5,000 to 10,000 barrels a day by 2012, according to Brian Glover, Tullow's manager in Uganda. The company expects output to reach 150,000 barrels a day in Uganda within five years.

Tullow is exploring the basin with partner Heritage Oil Plc as Uganda seeks to develop its resources to reduce fuel imports. Heritage operates Blocks 1 and 3 in the basin, of which Tullow holds 50 percent. Block 2, which includes the Ngassa-2 well, potentially the largest discovery in the area, is fully owned by Tullow. Ngassa may hold as much as 600 million barrels of oil, McCoss said in September.

Eni CEO, Paolo Scaroni was in Uganda in August and met with President Museveni where he showed off his company's technological and operational capabilities in the oil and gas sector. At the time, the Eni boss said it was interested in building a 100,000 barrel-a-day refinery in Uganda and a 1,300-kilometer pipeline to the Kenyan port of Mombasa. A railway line and roads are also planned for the oil region.

President Museveni reportedly encouraged Eni' to invest in Uganda and promised to support its interests. Speaking to reporters in Italy, ENI Chief Executive, Paolo Scaroni said no decision had been taken.

Eni is not a total stranger to Uganda. Its subsidiary, Agip operated several downstream operation including fueling stations until 2000 when Shell Uganda acquired its assets in Uganda, Kenya, Ethiopia, and Eritrea. At the time, Agip explained that it was pulling out as part of a global strategy to consolidate its activities in Europe, Asia, and South America.