French oil giant Total has entered into an agreement with Tullow to acquire an extra 21.57 per cent interest in the Uganda Lake Albert oil project.

Total will pay Tullow $900 million in instalments as the project develops, with an initial payment of $100m - leading some observers to believe Tullow is pulling out of the Ugandan oil sector (see below).

“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," said Patrick Pouyanné, Total Chairman and CEO.

"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."

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.

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.

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London-Based Tullow Oil plc's announcement that it is once again scaling down its stake in Uganda's oil development, shedding off nearly two thirds of its shareholdings to the rival firm, Total E&P for $900million is raising fears that the firm could be slowly exiting the country's oil sector.



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