CNOOC Pre-empts Total in Uganda

Chinese state-owned China National Offshore Oil Corp (Cnooc) has notified Tullow that it has exercised its pre-emption rights under the joint operating agreements between Tullow, Total and Cnooc to acquire half of the interests being transferred to Total in Uganda on the same terms and conditions that were agreed between Tullow and Total two months ago – including as to the amount, structure and timing of the consideration payable to Tullow.

Tullow agreed in January 2017 to farm-down 21.57% of its 33.33% interests in the oil-rich exploration areas 1, 1A, 2 and 3A in Uganda to the French company for a total consideration of $900mn – which would have given it a majority 54.9% stake in the acreage. 

Tullow said March 17 it will now work with Total and CNOOC to conclude definitive sale documentation in relation to the farm-down.  Completion of the farm-down is subject to certain conditions, including the approval of the government. Once completed, Tullow will cease to be an operator in Uganda but will retain a presence in-country to manage its non-operated position.

The pre-emption may be seen as a further sign of China's strategic interest in Africa's oil and gas resources.

Mark Smedley