Tullow agrees deals for Uganda oil production

TULLOW Oil has signed two production-sharing agreements with Uganda, allowing it to complete a deal with China’s CNOOC and France’s Total that will pave the way for commercial oil production.

Ugandan energy minister Irene Muloni said Tullow had agreed to the construction of a $2 billion (£1.3bn) refinery – a key sticking-point in talks as the companies had wanted to export the crude.

“They have agreed to the government’s policy of establishing a refinery in the country to produce petroleum products for the country and the region,” Muloni said.

“Consideration for export of crude will be made as more reserves are discovered in the country.”

The facility is expected to begin with a limited refining capacity of 20,000 barrels a day, ratcheting up over a number of years to a peak of between 150,000-200,000.

Uganda discovered oil in the west of the country, along the border with the Democratic Republic of Congo, in 2006. Production had been expected to start early this year, but wrangling over tax and other issues delayed development.

“Tullow will now finalise arrangements with CNOOC and Total for completion of the farmdown and related transfer of monies as soon as possible,” it said.