Do ExxonMobil, Total Have the Edge in Uganda Oil Stakes Race?
KAMPALA, Uganda (Dow Jones)
U.K.-based Tullow Oil PLC (TLW.LN) favors selling part of its Ugandan oil interests to U.S. oil company Exxon Mobil Corp. (XOM) or France's Total SA (TOT) to participate in their development, according to people familiar with the sale process.
Tullow Oil previously said it had opened its data room in October to companies interested in buying minority stakes in its Ugandan discoveries. At least 10 international companies expressed interest in the blocks located in the Lake Albert area.
People familiar with the matter have now confirmed that Tullow prefers Total and ExxonMobil, which were among those invited to its data room.
The Tullow-operated blocks hold the largest part of Uganda's reserves, with about 2 billion barrels of discovered or prospective resources, measured in oil equivalent. The international oil companies' interest highlights the industry's strengthening appetite for access to Africa's emerging oil nations.
Tullow prefers to team up with ExxonMobil or Total because both are experienced in developing pipelines and refining projects, and both have strong financial capacity, one of the people said.
Ugandan President Yoweri Museveni hosted a November meeting in the country with ExxonMobil executives to discuss the possible acquisition of a stake in Tullow's acreage, according to a Ugandan security ministry memorandum seen by Dow Jones Newswires.
The Ugandan government is expected to make a decision on the Tullow stake sale early this year.
Total declined to comment Monday about the proposed sale of a stake in Tullow's Uganda acreage.
ExxonMobil's press office for exploration and production didn't immediately comment Monday.
Tullow Oil Uganda Ltd. declined to comment, while a spokesman for Tullow in London didn't return a request for comment.
The security ministry's memo also warned the government against approving a related deal--the proposed takeover of Heritage Oil PLC's (HOIL.LN) Ugandan interests by Italy-based Eni SpA (E). The document said that such a deal could hurt the country's economy.
Heritage and Tullow Oil are joint owners of blocks 1 and 3A, which means Tullow's new partner may have to work with Eni.
Tullow had hoped to secure bids from potential stake buyers by the end of 2009, according to the security ministry's memo, which was submitted to President Museveni in December. However, Heritage's decision to sign a letter of intent with Eni for the sale of its Ugandan interests has complicated Tullow Oil's plans.
According to the memo, a joint operating agreement between Heritage and Tullow, signed on Aug. 22, 2002, doesn't allow Heritage to sell its stake without Tullow Oil's consent.
Tullow Oil is the sole owner of block 2 on the Ugandan side of the Albertine rift.
"Tullow Oil officials say that they will resist the [Heritage assets] deal at all costs," the memo said.
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