Oil firms seek fresh talks

Monday October 7 2019

Seeking. Oil companies  are seeking to engage

Seeking. Oil companies are seeking to engage government on a way forward. FILE PHOTO  

By HALIMA ABDALLAH

Kampala. Oil companies have proposed fresh dialogue to resolve the current standoff, a month after suspending all technical activities in the oil and gas sector.

The companies, which abandoned oil infrastructure projects following tax payment disagreements with the Uganda Revenue Authority, now say they are keen to resume operations.

Tullow, French major, Total E&P and China National Offshore Oil Company (CNOOC), the joint venture partners, are expected to present their new position which will form a basis to start fresh negotiations.

“The idea is that we need to have continued communication with the authorities to understand each other. We respect the frustrations of government and we believe they can imagine our situation. We have spent a lot of money already, $3.2b jointly with our partners,” Total E & P general manager in Uganda, Pierre Jessua, he said last week, noting: “We are all working in good faith to find a solution and I am optimistic we will be able to.”

President Museveni has openly criticised the oil multinationals, accusing them of coming up with new demands even after government had invested billions and changed laws to accommodate them.

Total E&P, halted all technical activities related to the establishment of the East African Crude Oil Pipeline and upstream operations at Tilenga in September following the unsuccessful sale of Tullow Oil’s 21.57 shares.

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Total said it could not continue to spend money on technical teams when there was no clarity on the way forward. Tullow had On August 29 announced it had terminated the sale and purchase deal after it failed to reach an agreement with URA over payment of capital gains tax.

The tax negotiations was a pre-condition to concluding the sale and purchase agreements. The suspension came at a time when negotiations on the building of the pipeline had reached advanced stages.

“It is premature to say we could do this or that. We have the Tullow deal terminated it means we are back into a shareholder configuration where each of us owns 33.3 per cent. The deal is now in the past so, we need to sit together first as joint venture partners and discuss next steps before we speculate because anything can happen,” said Mr Jessua.

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