Tullow Close to Acquiring Congo Oil Exploration Rights

KAMPALA, Uganda (Dow Jones Newswires), Mar. 25, 2009

U.K.-based Tullow Oil PLC, which operates two blocks on the Ugandan side of the oil-rich Albertine Rift, is close to acquiring rights on two more blocks on the Congolese side of the rift, the company's vice president in charge of African business told Dow Jones Newswires Wednesday.

Tim O'Hanlon said the prospect of acquiring the rights looks brighter following fruitful talks with the Congolese government.

"Having the same company operating on both sides of the Albertine Rift is good for both Uganda and Congo," he said in a telephone interview from Kinsansha, the Congolese capital.

The two governments realized the need to co-operate in order to enjoy the benefit of the anticipated oil exploitation, he said.

Congo revoked exploration rights from Tullow Oil and Jersey-based Heritage Oil Ltd. in blocks 1 and 2 in 2007 before they could secure a presidential decree to start drilling activities. The Congolese government also accused the companies of enlisting the support of the Ugandan army to violate its borders.

According to experts, the commercial oil reserves discovered on the Ugandan side of the rift extend to the Congolese side and the two countries need to co-operate before commercial exploitation can start.

Early this month, Uganda and Congo agreed to upgrade their diplomatic relations to ambassadorial level, and according to analysts, this is expected to end years of strained relations.

O'Hanlon said both Uganda and Congo will enjoy economies of scale if it's the same company operating on both sides. Tullow Oil has already indicated that oil reserves on the Ugandan side justify an export project.

Copyright (c) 2009 Dow Jones & Company, Inc.

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