Tullow Oil has sold its business entity in Uganda to Total, including the East African Crude Oil Pipeline.
Tullow owned about 33.3 percent stake in Uganda’s oil sector, which will cost Total $575 million (approximately Ksh62 billion).
According to a statement from Total on Thursday, the French company will pay $500 million (Ksh54 billion) at closing and $75 million (Ksh8 billion) when the partners take the Final Investment Decision to launch Uganda’s oil project.
“We are pleased to announce that a new agreement has been reached with Tullow, for less than $2 a barrel in line with our strategy of acquiring long-term resources at low cost, and that we have an agreement with the Uganda government on the fiscal framework,” Total chief Patrick Pouyanne said in a statement.
Read: Struggling Tullow Oil Appoints Rahul Dhir as its New CEO
Dorothy Thompson, executive chair of Tullow Oil plc, says the proceeds of the sale will help the company toward reducing its net debt.
“The sale of our Uganda assets is an excellent first step towards our target of raising over 1 billion dollars of proceeds to reduce net debt, strengthen the balance sheet and secure a more conservative capital structure,” Thompson said.
China National Offshore Oil Corporation’s (CNOOC), which owns at least 33.3 percent of Uganda’s oil sector, will have the right to exercise pre-emption on 50 percent of the transaction.
The buyout will see Total own over 50 percent in the oil sector in Uganda.
According to Tullow, an agreement on a tax issue with the Ugandan authorities has been reached in principle.
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