Tullow Advances in $10 Billion Ugandan Project With Total, Cnooc

14-March-2012

Tullow Oil Plc (TLW) said it’s advancing together with Total SA (FP) and Cnooc Ltd. (883) in an oil field development in Uganda after selling stakes in the project to the new partners for $2.9 billion.

The group will invest “in excess” of $10 billion to develop the fields in Uganda’s Lake Albert Basin, as well as build a local refinery and an export pipeline to pump surplus crude to world markets, Tullow Chief Operating Officer Paul McDade said today in an interview.

The U.K. company, which last month sold interests in the fields to the French and Chinese partners after almost a year of talks, is expanding its projects in Ghana and Uganda while drilling exploration wells in Africa and Latin America that have potential to open new frontiers.

Tullow, based in London, has “a huge portfolio of opportunities” with exploration and development, Chief Executive Officer Aidan Heavey said today in an interview. “We have lots of organic opportunities and we see lots of growth. We do look at acquisitions every now and again” though “there is nothing on the agenda” for now.

The partners are set to submit Lake Albert field development plans to the Ugandan government in the second half of the year for approval and expect to pump commercial volumes of oil from 2016.

“We had a period of six months when we had not been able to fully utilize all the rig capacity we had there” before Uganda signed production-sharing agreements, McDade said. “We had been testing some wells already.” The company is “storing the oil and we are looking to make some oil sales.”

Choosing Pipeline Route
Tullow plans to supply “a few thousand” barrels of oil a day starting from late 2012 to the domestic market from well flow tests, he said. The crude will be used by industrial users to replace some of the fuel imported into Uganda.

The partners and the Ugandan government will be discussing the future route for the oil export pipeline, which can cross either Kenya or Tanzania on the way to the Indian Ocean.

Choosing a path for pipelines “is very strategic regionally,” McDade said.

Production from the Ugandan fields, which hold an estimated 2.5 billion barrels of oil, will reach more than 200,000 barrels of oil a day, Tullow has said.

Drilling will focus on appraisal of the Ngege, Nsoga and Waraga discoveries this year, Tullow said today in a statement. It will drill a well at the Kanywataba prospect at the southern end of the basin in the third quarter of the year.

Bloomberg News