Uganda: Tullow Treasures Uganda's Oil Project, Says General Manager

19 November 2019

Tullow oil has hailed Uganda's oil and gas project which it has described as one of the best in Africa.

"At the moment, the Ugandan (oil) project is one of the best projects in Africa. What we need is to try and get it the final investment decision and we are continuing working with Government in negotiating on commercial agreements," the Tullow Uganda out-going General Manager, Jimmy Mugerwa said.

Mugerwa made the comments during his recent visit to Hoima district where Tullow oil donated 4 Solar-powered Computer Laboratories to Government aided Primary Schools in Hoima and Buliisa Districts.

Mugerwa has since been elevated to a post of corporate head of infrastructure and organization at Tullow Oil Plc.

In August this year, Tullow Oil's negotiations regarding its farm-down of significant stake to Total Uganda and CNOOC were terminated following the expiry of the Sale and Purchase Agreements (SPA) for the same.

Tullow announced that it was unable to secure a further extension of the SPA with its Joint Venture Partners, despite previous extensions to the same having been agreed by all parties.

According to Tullow, the termination of this transaction was a result of being unable to agree all aspects of the tax treatment of the transaction with the Government of Uganda which was a condition to completing the SPA.

Oil in Uganda understands that the collapse was a result of disagreements between the Ugandan Government and Tullow Oil over the capital gains tax.

Tullow Oil wanted a tax waiver on its transaction with Total and CNOOC while the Ugandan Revenue Authority and the Joint Venture Partners could not agree on the availability of tax relief for the consideration to be paid by Total and CNOOC as buyers.

In its statement, Tullow said it will now initiate a new sales process to reduce its 33.33% Operated stake in the Lake Albert project which has over 1.5 billion barrels of discovered recoverable resources and is expected to produce over 230,000 bopd at peak production.

The Joint Venture Partners had been targeting a Final Investment Decision for the Uganda development by the end of 2019, but the termination of this transaction will lead to further delay of the FID and hence delay the commencement date of Uganda's oil production.

Total E&P Uganda, CNOOC Uganda and Tullow Oil have scaled down their field activities pending the outcomes of their boardroom negotiations with the Ugandan government over the capital gains tax issues that stalled Tullow's farm down.

"We have not closed shop or suspended activities. As you can see, we are still working" Mugerwa said. He says after the FID is made, it will pave way to Uganda achieving first oil production.

When asked about what Uganda should expect from Tullow Oil, Mugerwa seemed to suggest that the FID will unlock many opportunities for Ugandans.

"Once this project gets FID, we shall commit a lot of money as oil companies, and many Ugandans will get employment and other opportunities. Your prayer should be us reaching the FID" he says.

Tullow Oil has enjoyed back to back oil discoveries in Uganda's Albertine basin and alongside oil exploration, the firm claims to have spent over $ 5 million on social investments.

"We have built schools, health centres, sponsored over 100 students in post graduate studies in different disciplines and initiated several social investments because we believe in creating shared prosperity" he said.

Tullow's Information, Communication and Technology support

Recently, Tullow Uganda Operations Pty Ltd handed over four computer labs and 65 computers to four government primary schools including; Ndandamire Primary school and Buliisa Primary school (all in Buliisa), and Kaiso Primary school and Kyehoro Primary school (all in Hoima District).

Mugerwa underscored the impact of ICT in development and asked teachers, oil industry players, and government to provide and equip the younger generation with the right tools and skills that will prepare them for life in the digital era. Let us inspire pupils to be curious and interested in careers in the ICT world at an early age, mainly because they are the next generation of computer scientists and professionals, he says.

The Tullow Alumni Group Uganda (TAGU) trained 65 teachers in computer literacy, who in return will pass on this knowledge to over 3,500 pupils who are set to benefit from the project. The backdrop of this initiative is the reality that majority of the schools surveyed in Buliisa and Hoima district did not have any computing facilities for both administrative and teaching purposes, largely because they could not afford to buy the equipment.

The Hoima District Education Officer, Godfrey Sserwanja who represented the Permanent Secretary in the Ministry of Education and Sports, said ICT has been a missing gap in most schools. The benefiting schools might be model schools because they will be among the first few to have computers in the region, Sserwanja says.

He said computers will ease teaching and learning since learners will easily be shown videos and images about subjects they will be taught.

Mr. Kadiri Kirungi, the Hoima district Chairman asked oil companies to scale up initiatives aimed at improving the welfare of the people. We want to see what each oil company is doing for our people. Many people are running to us complaining that they are sidelined in employment opportunities. We want companies to be proactive towards the concerns of our people, Kirungi said.

In the FY 2019/20, Government allocated Shs146.2 billion to the ICT sector.

Tullow Oil is a leading independent oil & gas, exploration and production company. The Group has interests in over 80 exploration and production licenses across 15 countries.

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