TULLOW OIL and the Ugandan government have resolved a tax dispute that has held up the company’s plans to start producing the east African nation’s first crude, a company official said.
“For all intents and purposes, the tax issue is resolved and we are discussing the way forward,” Elly Karuhanga, chairman of Tullow Uganda, said yesterday in Kampala, the capital.
A disagreement over an exploration licence cancelled by the government last year has also been addressed, he said, without providing further details.
Tullow shares rose as much as 2.7 per cent and were up 19 pence, or 1.4 per cent, at 1,369 by the close of London trading.
The exploration group paid about $1.5 billion in July to Heritage Oil for its interests in Block 1 and 3A in the Lake Albert basin.
Uganda has delayed final approval on the purchase of the stakes, saying it is owed $404 million in capital gains tax from the transaction.
In August, Uganda cancelled Tullow's exploration license for the Kingfisher area in Block 3A because it had expired and the company had not applied for a production licence, the New Visionnewspaper reported, citing energy minister Hillary Onek.
Tullow is expected to start oil production in Uganda in 2012 and not this year because plans to meet the earlier target are “quite challenging”, Brian Glover, the company’s manager in the east African country, told reporters at a conference for the company’s suppliers in Kampala yesterday.
Tullow’s investment in Uganda will increase to about $10 billion over the next decade, making it the east African region’s biggest investment project, Mr Glover said. – (Bloomberg)
