Tullow CEO Sees Uganda Oil Plan MOU Agreed in Next Few Weeks

LONDON - U.K.-listed oil explorer Tullow Oil PLC is weeks away from an agreement with the Ugandan government on the final outline of a plan paving the way for investments of some $12 billion to develop the country's nascent oil sector, Chief Executive Aidan Heavey said Wednesday.

The plan includes a 30,000 barrels a day refinery initially and an export pipeline to carry the crude from the Lake Albert Rift basin oil fields that Tullow is developing with partners Total SA and China's CNOOC Ltd.

The companies and the government have already agreed the refinery size and an oil export pipeline but are working out the details on the capacity of the pipeline, which will depend on the development plan. The actual route of the pipeline would be decided after the memorandum of understanding has been signed, Mr. Heavey said.

"We're really down to the fine print...The MOU is probably the most critical thing and the hardest thing to get done. Once that's done then the rest is just process," Mr. Heavey said, adding that the goal was to take a final investment decision on the project sometime next year.

With an estimated 3.5 billion barrels of untapped oil reserves, Uganda was expected to quickly join Nigeria, Angola and Sudan among sub-Saharan Africa's major crude producers. But the development has been held back for almost two years due to disagreement with the government over the size of the refinery.

In Ghana, Mr. Heavey said government approval for the $4.5 billion Tweneboa-Enyenra-Ntomme oil project was delayed from the first quarter of this year by discussions over whether natural gas deposits in the fields should be developed together with the oil or separately and what price the government should pay for the associated gas, or gas produced as a byproduct of the oil extraction.

"We're very close, we're not that far away," he said of agreement on a development plan for TEN.

First production from the TEN oil project off the coast of Ghana, is expected to be within 32 and 36 months after government approval. Tullow submitted its plan late last year.

Kosmos Energy, Anadarko Petroleum Corp., South Africa's Petro SA and Ghana National Petroleum Corp. are also partners in the TEN project.


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