Kampala — Oil companies - Total E&P, Tullow Oil and CNOOC - are locked in a bitter fight for control of Uganda's oil sector. The coveted prizes are deals worth about $20 billion.
The three entered a partnership in 2012 when Tullow Oil, which was the sole exploration company farmed down 66% of its stake, in equal 33% portions each, to the Chinese and French biggies. The Irish minnow bagged $2.9 billion in the farm-down and still retained a 33.3% stake in the deal. Up to that point, it looked like a great deal.
But insiders tell The Independent that if the three companies do not resolve their current disagreements, their joint venture might collapse, and Uganda's bid to start oil production might be delayed once again.
The French company and the Chinese have been squabbling over control at almost every turn since the government allowed them to acquire stakes in the oil fields from Tullow. With the coming production phase and the prospect of mega oil deals, the fights appeared to intensify this November.
The Independent has learnt that senior executives from the companies have had to seek frantic meetings with President Yoweri Museveni to resolve their issues.
The Independent has learnt that Total S.A's Vice President for Africa, Guy Maurice and another top official flew into Kampala mid-November to meet the President.
Sources say Maurice's delegation camped in Kampala for about half a week until it met the president. It was the second time Maurice was coming into town in a few months.
And his meeting followed another by CNOOC's Vice-President Xu Keqiang from China, who together with the Chinese ambassador, met Museveni and raised concerns over Total.
The Current Fight.
The current fight was sparked by a $ 900 million deal in which Tullow Oil is selling 22 percent of its 33.3 percent stake after being frustrated by Museveni's decision to build the Ugandan oil pipeline to the Indian Ocean through Tanzania instead of through Kenya.
Tullow Oil, which also operates oil fields in Kenya, was lobbying for the Kenyan route because this would allow it transport both its Uganda and Kenya oil cheaply and conveniently. On its part, CNOOC stood to secure the pipeline construction deal for Chinese companies.
Total, on the other hand, was pushing for the Tanzanian route through the port of Tanga and demonstrated, through a feasibility study carried out by Houston-based Gulf Interstate, that this route was easy to complete, and safer and cheaper to operate.
The Total study, upon which Museveni based his decision, showed that the Lamu port was insecure because it lies near the border with Somalia, which is al-Shabaab terrorist group territory.
The study also showed that the Lamu port required more work compared to the Tanga port which is already operational. Unlike in Kenya, land acquisition would be easier in Tanzania as land there is owned by the state unlike in Kenya where land is owned by individuals and its acquisition tends to be disrupted by compensation disputes.
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