Tullow Oil has agreed to sell stakes in its Ugandan interests to Chinese company CNOOC and French firm Total, in a deal that will see it receive $2.9 billion.
Under the deal, Tullow will retain a one-third interest, while Total and CNOOC will take one-third each.
The signing of the signed sale and purchase agreements satisfies a key condition of the memorandum of understanding agreed between Tullow, the Ugandan government and the Uganda Revenue Authority. Tullow said it must now make "certain tax-related payments" to the government.
Uganda's energy minster Hilary Onek said the country would receive a total of $472 million in taxes from the farmdown deal. However, Tullow said this figure was calculated incorrectly and that it believes the total liability to be "significantly less" than the $141 million it has agreed to deposit with the government pending discussions on the matter.
Additionally, Tullow, Total and Cnooc have agreed to deposit $313 million with the government while Uganda pursues Heritage Oil, Tullow's former partner in the fields, for $404 million in taxes the government says is due on the sale of its interests to Tullow.
Tullow said it expected this money would be repaid but it was unclear if the companies will receive any interest on the deposit while the Heritage dispute rumbles on. The matter is expected to take a year to settle.
The memorandum of understanding grants Tullow and its partners new licences over EA-1 and an onshore area of EA-3A. It also confirms the right to develop the Kingfisher discover.
Development plans for the basin will be presented to the Ugandan government for approval, which targets production of at least 200,000 bopd.
Tullow chief executive Aidan Heavey said the agreements secured the future of oil production in Uganda.
Additional reporting: Reuters
