Kampala — The second major prospecting firm in Uganda's oil fields, the British company Tullow Oil plc, is expected to announce this week that it will sell half of its stakes in Uganda to a Chinese company at $2.5 billion (Shs4.7 trillion).

The development comes shortly after ENI s.P.a, the Italian oil giant, announced withdrawal of its bid to buy Heritage Oil & Gas company's stakes in Ugandan oil field after Tullow; a co-investor in the Albertine region, invoked its pre-emption rights to buy from the UK firm.

Minister unaware

The Sunday Times, a weekend sister publication of UK's respected The Times, did not divulge the source of the story but reported that the largely Chinese government owned, China National Offshore Oil Corporation (CNOOC) has agreed to the deal.

In Kampala, State Minister for Energy Simon D'Ujanga, said last night that the government is yet to receive Tullow's proposal and preferred co-investor in the country's fledgling oil industry.

"There are 18 companies that have interest in buying Tullow shares. The company is supposed to assess all of them and select a few and bring a proposal to the government for consideration," he said, adding: "As far as we are concerned, Tullow is still assessing and I shall not speculate until they bring their proposal but the government has the final approval."

News of the negotiation breakthrough, part of Tullow's farm-out arrangement, comes 10 days after President Museveni met a CNOOC delegation led by company Chief Executive Officer Fu Chengyu at State House Entebbe on January 26.

Museveni blessing

"President Museveni expressed happiness with the investment proposal (of the Chinese) in the oil exploration sector in Uganda," a statement issued by State House then quoted Mr Museveni as having said.

The Sunday Times reported that final details of the sale were being worked out at the weekend with Total SA, the French oil group, which could become an equal partner in the fields with the Chinese and participate in their development. "Tullow is expected to announce the deal after Yoweri Museveni, the President of Uganda, gives it his blessing, which is expected this week," the newspaper said in its article.

"The sale of the three blocks, worth between $4.5 billion and $5 billion, in the Lake Albert basin will be part of a larger development plan."

Daily Monitor was unable to reach Brian Glover, the Uganda country manager of Tullow, to offer more details of the expected deal as he could not answer repeated telephone calls.

Mr Elly Karuhanga, the company president here, who reportedly brokered last month's meeting between CNOOC and Mr Museveni, said he was aware of a deal in the offing. "That is great news," he said by phone last night.

"Tullow is fully aware that after they finish negotiations, the government will have to be informed and give its consent."