Oil companies fight it out over Uganda’s oil fields

Multinational oil companies fight it out over who will win the right to develop Uganda’s oil fields has turned from a tussle into an all out fight with Heritage Oil and Tullow Oil Plc of Ireland, confirmed up to 2 billion barrels and a potential for 6 billion in Uganda’s Albertine region, were ready for production.

The current scramble peaked late last year when Heritage offered to sell its 50 percent share to Italian state-energy giant, ENI, for US$1.35 billion. Tullow exercised its right of pre-emption and matched the ENI offer to Heritage. Tullow is, however, cash-strapped and aggressively wooing the biggies to invest on its side against ENI. Total, Exxon Mobile, and CNOOC have been mentioned.

No one is sure which deal Uganda’s President Yoweri Museveni will accept. As a result, major international oil companies have interrupted their schedules to be on a plane to Entebbe at a moment’s notice when it seemed that State House was swaying one way or the other.

First it was the Italian foreign minister that touched down in Uganda, and then it was Irish Tullow CEO Aidian Heavey, then a delegation from the Chinese National Offshore Oil Company (CNOOC).

All were here to court President Museveni for the chance to produce the 2 billion barrels of oil currently estimated in Uganda’s oil fields. Set to make a decision within a couple of weeks, Museveni faces a tough choice when it comes to who should develop oil in Uganda.

By early January 2010, it looked like the deal to sell Heritage’s 50% shares in oil to ENI was all but done. The minister of Energy, Hillary Onek, made an announcement January 21 that appeared to favour the Italian giant ENI.

The Uganda President Museveni has other requirements of the company he lets in. He has been clear that whoever develops Uganda’s oil should not make off as quickly as possible with it to Mombasa. Museveni wants a refinery so that value addition can be done in the country and Uganda’s national resources not exploited by foreign companies.

Tags:  fields, oil, oil companies, uganda