Tullow Presents Partnership Terms to Ugandan Govt

KAMPALA, Uganda (Dow Jones), Apr. 1, 2010

U.K.-based Tullow Oil presented its partnership terms with Cnooc Ltd and Total SA to the Ugandan government Thursday and is now awaiting government approval to formalize the deal, people familiar with the situation told Dow Jones Newswires Thursday.

Company and government officials said that the partnership terms are for the integrated oil project in Uganda which will include oil field development, an export pipeline to the east African coast and a refinery.

"The three companies have already agreed on the partnership which they presented to government today," one person said.

Tullow, Total and Cnooc will form an operating company for the project in which each of the companies is expected to hold one-third of the project covering blocks 1, 2 and 3A in the Lake Albert basin.

The three companies are expected to inject at least $5 billion to develop the oil fields in the three blocks, the person added.

A Tullow Oil spokesman declined to comment.

Ernest Rubondo, the head of Uganda's state-run oil production and exploration department told Dow Jones Newswires separately that talks with the three companies on the project were continuing.

"We are really progressing well but this is so big a decision, that is why it is taking this long," he said, adding that the final decision on the deal is expected before the end of April.

The government will have to approve Tullow's proposed takeover of Heritage Oil PLC's 50% stake in two blocks as well as the partnership deal with Cnooc and Total.

Total and Cnooc could not immediately be reached for comment.

Copyright (c) 2010 Dow Jones & Company, Inc.