Total suspends $3.5 billion pipeline project after Tullow deal collapses

KAMPALA (Bloomberg) - Total SA has suspended its planned $3.5 billion crude export pipeline from Uganda to Tanzania after the collapse of a deal to buy a stake in Tullow Oil’s oil fields in Uganda.

The French oil major has terminated all activities related to the 1,445-kilometer (898-mile) conduit from its oil fields in Uganda to Tanga in Tanzania because shared ownership in the project was to be determined upon the completion of the Tullow deal, an official familiar with the project at Total’s Ugandan office said.

Last week, Tullow Oil was forced to abandon plans to sell a stake in its Ugandan project to Total and China’s Cnooc Ltd. and restart the process from scratch after tax negotiations stymied the deal. The termination of the agreement was a blow to Tullow, which had sought partners to help it develop about 1.5 Bbbl of recoverable oil in its Ugandan fields.

Total E&P Uganda, which was leading the pipeline project, dismissed employees who were set to undertake works on it, the official said. The explorer was involved in initial land acquisition in both countries, the official said.

Cnooc Uganda Ltd., which is jointly developing the country’s crude finds, suspended at least 12 employees following delays on the project, a company official familiar with the matter said by phone without providing further details.

Total did not immediately respond to a request for comment.