Tullow Oil's sale of a stake in its planned 230,000 barrel per day project in Uganda to France's Total and China's CNOOC has been called off due to a tax dispute with the Ugandan authorities, Tullow said today.
The London-listed firm had previously sold about two thirds of the project to CNOOC and Total for $2.9 billion, in transactions completed by 2012.
Today's announcement relates to the further reduction of Tullow's stake to about 11%, which would have raised $200 million helping the British firm reduce its net debt which stood at $2.9 billion at mid-year and reduce its operational commitments to the project by around $700 million.
Tullow said the firms involved in the deal could not reach an agreement with the Ugandan Revenue Authority on the tax relief for money to be paid by Total and CNOOC to Tullow.
"Tullow will now initiate a new sales process to reduce its 33.33% operated stake in the Lake Albert project, which has over 1.5 billion barrels of discovered recoverable resources," it said.
The firm said the partners in the Uganda project had aimed to reach a final investment decision on development by the end of 2019 but it said terminating the stake sale "is likely to lead to further delay."
Chief Executive Paul McDade said it was too early to give a new timeframe for the final investment decision or to talk about potential new partners in the project.
He said Total and CNOOC had not yet indicated their view about a fourth partner coming in.