France's Total has entered into an agreement with Tullow under which Total will acquire an additional 21.57 per cent interest from Tullow in the Uganda Lake Albert oil project.
Total will pay Tullow US$900 million with the payments to be made in instalments along the development of the project, with an initial payment of $100M at closing of the deal which still requires regulatory and government approvals.
“Following the agreement on the Tanzanian export pipeline route, this transaction gives Total a leadership position to move this project efficiently toward FID in the current attractive cost environment, while providing strong alignment and a pragmatic financing scheme for our partner Tullow. Our increased share in the Lake Albert project will bring significant value to Total and fits with our strategy of acquiring resources for less than 3$/b with upside potential,” said Patrick Pouyanné, Total Chairman and CEO.
Following this transaction, Total will hold a 54.9 per cent interest, strengthening its position in this competitive project and paving the way for a project sanction in the near future.
Under the terms of the deal, Total will acquire 21.57 per cent out of Tullow’s existing 33.33% stake in all of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A. Total, which is already operator of licenses EA1 and EA1A, will in addition take over operatorship from Tullow of license EA2, enabling significant efficiency gains and synergies.
In April 2016, the Government of Uganda decided to export the Lake Albert oil through a pipeline (EACOP) via Tanzania to the port of Tanga. And in August 2016, the production licences for EA1 and EA2 were formally granted. The Uganda Joint Venture is now commencing the FEED (Front End Engineering and Design) phase for the Upstream and the EACOP pipeline.