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Tullow forced to cancel deal to sell stake in Ugandan licenses to Total, CNOOC

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Tullow forced to cancel deal to sell stake in Ugandan licenses to Total, CNOOC

A deal between Total SA, Tullow Oil PLC and CNOOC Ltd. for Total and CNOOC to acquire additional stakes in Ugandan licenses will be terminated, Total and Tullow confirmed in separate Aug. 29 news releases.

Tullow Oil said the termination was due to the lack of agreement between the Ugandan Revenue Authority and the joint venture partners on the availability of tax relief for the payment of Total and CNOOC as buyers. The deadline for closing the transaction was already extended several times, Total said.

In January 2017, the three companies entered into a sale and purchase agreement for Total and CNOOC to collectively acquire an additional 21.57% interest in the Lake Albert licenses, which cover blocks EA1, EA2 and EA3. The deal would have boosted Total and CNOOC's stakes to 44.1% each while Tullow would have kept an 11.8% interest. Instead, with the deal termination, Tullow, Total and CNOOC's interest will remain at 33.3% each.

Total President for Exploration & Production Arnaud Breuillac said the partners remain committed to working with the Ugandan government to address the issues required to reach an investment decision.

Tullow said it will initiate a new sales process to slash its 33.33% stake in the Lake Albert project, which has over 1.5 billion barrels of recoverable resources and is expected to produce over 230,000 barrels of oil per day at peak production.

Tullow Oil said the joint venture partners were targeting a final investment decision for the project by the end of 2019, but the termination will likely result in further delay.