Kampala, Uganda | THE INDEPENDENT | Tullow Oil is in the final stages of farming down its stakes in the Lake Albert Graben to its joint venture partners Total and China National Offshore Oil Company (CNOOC).
Tullow, Total and CNOOC hold equal stakes of 33.3 percent in the Lake Albert Basin project covering three blocks – namely Block One, Block Two and Kingfisher.
Minister of Energy and Mineral Development, Irene Muloni, says the deal is due and that the Uganda Revenue Authority has computed a capital gains tax of 167 million dollars, equivalent to 617 billion shillings.
Minister Muloni says as the licensee she has given conditional consent to the farm down.
A farm-down is when an exploration company sells its rights over discoveries to other companies.
It is not yet clear how much Tullow will earn from the sale of the shareholding, whether it is selling all of its stakes, and when the final deal will be sealed.
Compared to Total and CNOOC, Tullow is a small oil company that risked it all to make the first oil discoveries of commercial quantities.
The farm down talks have been going on for much of this year and its delay has affected the final investment decision to develop the oil fields in Blocks One and Two.
This would be the third time Tullow is selling off its stakes to Total and CNOOC. In 2012 it sold 66.66 percent of its stakes, remaining with 33.33 percent stake in Block Two.
In January 2017, Tullow again sold 21.5 percent of its stakes in Block Two to the same joint venture partners.
It is said the delay in the farm down has affected the timeline for both CNOOC and Total to make final investment decisions key for kick-starting major developments in the basin.