Total increased its stake in Uganda’s oil development with the purchase of 64.71 percent of Tullow Oil’s interests in Exploration Areas 1, 1A, 2 and 3A. The agreement announced by Tullow Oil (Tullow) on January 9, 2017, was effective as of January 1, 2017. The sale, for $900 million, leaves Tullow with an 11.76 percent interest in Uganda’s upstream and pipeline development project.
In August 2016, Uganda granted Total and Tullow 25-year licenses for Exploration Areas 1 (EA1) and EA2. The firms were expected to make final investment decisions within 18 months of the issuance of the licenses, with first oil expected in 2020.
Tullow retains interests in Uganda, but Total and CNOOC now appear to be the leaders in developing Uganda’s oil fields. Tullow entered Uganda in 2004. In 2009, the Irish firm confirmed commercial quantities of oil in Uganda’s Lake Albert Rift Basin. It farmed down its equity for $2.9 billion to Total and CNOOC in a series of transactions that gave each partner an equal third share in basin development.
After agreeing in August 2015 to a joint pipeline with Kenya along a northern route, Uganda broke with its neighbor to announce in October 2015 that it was pursuing a southern route with Total through Tanzania.
Although the two countries don’t admit to being in a regional race to be first, in December 2015, media in Kenya reported that President Kenyatta convened a State House Team to report to him the modalities necessary for Kenya to become an oil exporter by September 2016. Just before this deadline, Tullow announced in August 2016, that first oil – 2,000 barrels per day – was possible by June 2017. The solution involves transporting crude 1,089 kilometres by road and rail to the export terminal in Mombasa.