Uganda, Tullow Oil resolve tax dispute: sources

Tue Mar 8, 2011 5:46am GMT
 

By Elias Biryabarema and Barry Malone

KAMPALA (Reuters) - Uganda has resolved a tax dispute with Tullow Oil, sources for the government and the company said, paving the way for Tullow to sell stakes in exploration assets to France's oil major Total and Chinese group CNOOC.

"The Ugandan government proposed that, as long as it has a guarantee that Tullow will pay the remaining taxes, it has no problem with its proposed partnerships with Total and Cnooc," the energy ministry source said.

"I am aware Tullow has responded positively to that arrangement and I think formal announcements on either side are coming within days."

A Tullow source told Reuters the company was aware of the offer and keen to reach an agreement with the Ugandan government within days.

The breakthrough will allow Tullow, one of Europe's top oil explorers after a series of big finds in Uganda and Ghana, to embark on a $10 billion development programme that will see Uganda start pumping crude next year.

The tax dispute arose after London and Toronto-listed Heritage Oil early last year sold its Ugandan properties -- exploration blocks 1 and 3A -- to Tullow with which it co-owned the assets on a 50 percent basis.

Uganda had refused to endorse the deal until Heritage paid $404 million in capital gains tax on the $1.45 billion it earned from the sale.

Uganda, East Africa's third biggest economy, discovered commercial quantities of hydrocarbons in the Albertine rift basin along its border with the Democratic Republic of Congo in 2006. Oil companies estimate reserves of up to 2.5 billion barrels.   Continued...

<p>A customer fuels her car with unleaded petrol at a Morrisons supermarket in Coalville, central England, October 15, 2008. REUTERS/Darren Staples</p>

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