LONDON (Dow Jones Newswires), May 12, 2009
Many large oil companies are interested in partnerships with Tullow Oil PLC (TLW.LN) in its Ugandan operations and the company will bring in a partner once major exploration work is complete, said the company's Chief Executive Aidan Heavey Tuesday.
"Chinese and major (international) companies have been very interested in Tullow," Heavey told shareholders at Tullow's annual general meeting.
"There may be too many interested parties for any one company to make an offer to buy Tullow outright," he said, but, "many bigger players are interested in co-ventures with Tullow in Africa."
"After we have covered the exploration phase...we will bring in a partner to fund the pipeline and development costs," Heavey said.
To bring the oil discovered in Uganda to world markets a 1,200 kilometer pipeline would have to be built to the port of Mombassa in Kenya.
"So far, we have enough oil to produce 200,000 barrels per day of oil, that needs an (export) pipeline...there is way too much oil for the local market," Heavey said.
Tullow and its partner Heritage Oil PLC (HOIL.LN) have drilled 10 wells in the Lake Albert Region of Uganda this year with a 100% success rate. Contingent reserves in the area now stand at 600 million barrels of oil equivalent, with an upside well in excess of a billion barrels, Heavey said.
Tullow is currently drilling one of the largest prospects under the lake, the Ngassa field, with the result expected in June. Several other wells targeting smaller prospects to the north of the lake will be drilled through the year.
Tullow will begin to look in earnest for potential partners to buy stakes in its Lake Albert license blocks once the results of the Ngassa-2 well are clear, a person familiar with the matter told Dow Jones Newswires.
China National Petroleum Corp. and China Petroleum and Chemical Corp (600028.SH), also known as Sinopec, have shown an interest in joining the project, but the Ugandan government would be more comfortable with a major international oil company joining the project, the person said.
Heritage Oil has an equal share with Tullow in two of the main Ugandan blocks and any potential Tullow partner could be interested in acquiring all or part of these stakes too, the person said.
Heritage Oil, which recently made a large oil discovery in Iraqi Kurdistan, hasn't indicated any intention to sell its Ugandan assets.
Tullow shares traded up 1.4%, or 13 pence higher, at 909 pence, at 1613 GMT.
Copyright (c) 2009 Dow Jones & Company, Inc.
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