CHINESE OIL giant CNOOC is seeking to join forces with Irish explorer Tullow Oil to develop its discoveries in Uganda, according to the country’s president.
The news comes as shareholders in Heritage Oil, Tullow’s exploration partner in Uganda, agreed to sell that company’s 50 per cent holding in two licence blocks in the African country’s Lake Albert rift basin to the Irish operator for $1.5 billion.
Tullow already has the rights to one block, and the Heritage shareholders’ vote will give it control of three licences with proven resources of 700 million barrels of oil, and a potential 1.5 billion.
Yesterday, reports said that Uganda’s president Yoweri Museveni is considering a proposal from Tullow to bring in CNOOC as its development partner.
However, the company itself has not named any partner. It pointed out that it is running “a transparent farm out process” that has attracted the interest of leading multinational and national oil companies. It is likely to make a decision early next month.
According to his officials, CNOOC has met Mr Museveni and expressed interest in entering the Ugandan oil industry via a partnership with Tullow. Multinationals Exxon and Total have also been named as possible suitors.
The Irish company said last week that it plans to bring in at least one partner to develop the oil fields. Chief executive Aidan Heavey indicated that this would involve a major oil producer. Any such deal will have to get approval from the Ugandan government.
Mr Heavey told The Irish Times that Tullow intends presenting the Heritage buyout and any agreement with a partner to the government for approval as a single package. There has been speculation that the Ugandans could block Tullow’s buyout of Heritage as they favoured a deal with Italian giant, Eni, which originally offered to buy Heritage’s interest.
Uganda’s energy ministry on Friday said the government was prepared to consider the Eni purchase, but that the administration was also aware of Tullow’s plans to recruit at least one partner and would consider these as well.
The ministry stressed that it did not want any operator to have a monopoly over the oil industry, and favoured any arrangement that would lead to early production. Mr Museveni’s comments prompted speculation that the administration is likely to favour Tullow.
Last month, Eni offered to buy out Heritage, but Tullow exercised its right of first refusal, and offered Heritage the same terms as Eni. The shareholders’ vote means Heritage cannot now sell on to a new bidder. CNOOC is China’s third biggest oil exploration and development company and is 70 per cent state-owned.
