SHARES IN Tullow Oil dropped almost 4 per cent yesterday after Uganda’s energy minister suggested the company might have lost one of its oil licences, which has expired, for good.

Tullow said on Wednesday the government had indicated it would not extend the licence until Tullow’s former partner in Uganda, Heritage Oil, agreed to pay capital gains on the sale of its interests to Tullow.

That announcement knocked 9 per cent off Tullow’s shares on Wednesday, even though Europe’s largest independent oil explorer said it expected a settlement in the coming weeks.

However, energy minister Hillary Onek adopted a less reassuring tone yesterday.

He denied the licence issue was related to the tax spat.

“That licence expired in February and six months down the road we have not received any application from any one for a production licence and, as per the terms of the PSA [Production Sharing Agreement], it had to revert to the government, and that’s what we have done,” Mr Onek said.

A Tullow spokesman said the company had been talking to the government about the extension for some time. When companies first win an oil licence, they are typically given a number of years of exclusive rights to explore.

If a company is successful and finds oil, its exploration licence usually entitles it to subsequently receive a production licence for the area, which could last up to 30 years.

The hardened position from Uganda, first reported in local newspapers, spooked Tullow investors, sending the shares down 3.8 per cent to £12.11. Heritage shares traded up 2.2 per cent.

Tullow said Mr Onek’s comments reflected no more than it had revealed on Wednesday. Some analysts agreed there was nothing new, with Citigroup saying the share drop represented a buying opportunity. – (Reuters)