Uganda pushes oil companies to carry on, even as Tullow plan fails

KAMPALA, UGANDA (Bloomberg) - Uganda is pressing the developers of its oil fields to commit to making a final investment decision this year, anxious to ensure that a failed plan by Tullow Oil to sell a stake in the project doesn’t stymie progress.

An FID committee comprising the heads of the oil companies and the local industry regulator will meet next week, Robert Kasande, the committee’s permanent secretary, said Tuesday. They’ll discuss the state of play after Tullow was forced to abandon its “farm-down” and restart the process from scratch as tax negotiations thwarted the deal.

“We are continuing to engage” and “are still going with the target of FID by the end of the year,” Kasande said in Kampala. Uganda won’t revise its tax laws because they “bring value to the country and cannot be changed,” he said.

Tullow, which has a 33.33% holding in the oil fields, had targeted an investment decision this year but said in August that the collapse of its planned transaction would probably lead to a delay. The termination of the agreement was a blow to the UK. producer, which had sought capital to help it develop about 1.4 Bbbl of recoverable oil with its partners.

If the companies do reach FID this year, the country would be on track to pump its first oil in 2022-23.