Economy
Tullow Oil too slow to develop Ugandan interests |
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| Economy | |
| Written by Gary Howes | |
| Friday, 22 January 2010 | |
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The government also expresses fears that Tullow Oil will establish a monopoly in Uganda.
Tullow Oil (LON:TLW) - a darling of the FTSE 100 in recent times - could be facing a snag in Uganda. However Uganda's Energy Minister, Hillary Onek, has threatened Tullow with punishment over the slow pace of development of the oil wells already discovered. Uganda is clearly eager to see oil revenues come in; Onek yesterday accused Tullow of breaching its contractual obligations by failing to start up oil production on its finds. "Whichever licence is causing delay will be revoked," says Olek. A key problem Tullow Oil is facing is its inability to exploit the Ugandan fields - Tullow at present simply does not have the capacity and know how, and funds, to exploit Uganda. The Lake Albert project, for example, "will require billions of dollars to develop and skills that Tullow so far lacks," says Robin Pagnamenta at The Times. Tullow however believes it can buy time with the Ugandan government as long as the two parties remain engaged. Chief Executive Aidan Heavey said Tullow was due to meet with the Ugandan Government in coming days, "we are confident and hopeful these will be fruitful," a spokesman said. The same source said Tullow was in talks with various partners who would be able to provide the necessary skills to exploit the Ugandan reserves. Added to the logistical problems faced by Tullow are issues over competition. Recently Tullow said it would buy out exploration partner Heritage Oil who are seeking to exit their joint venture with Tullow in Uganda. The prospect of a Tullow monopoly prompted Minister Onek to say they would favour a rival proposal from Eni, an Italian oil group. Tullow Oil shares are 1.49% higher on the FTSE 100 this morning.
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