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Total non-committal on Ugandan oil project FID as farmdown talks drag on

Highlights

Current project FID target now '2020+'

New farmdown deal needed to forward

Doubts over planned 2023 start-up

London — French oil company Total is keeping its options open over a final decision to develop a 1.5 billion barrels oil project in Uganda, as farmdown talks with partners in the country's maiden oil project drag on.

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Total downed tools in Uganda and took the planned FID off the table in September, saying it needed a "stable and suitable legal and fiscal framework" to go ahead with the investment.

A long-awaited deal over tax and cost recovery for the Lake Albert development was reached in November but a new farmdown deal with field partner Tullow Oil has been holding up a final investment decision.

Total made no reference to the project as part of Q4 earnings presentation last week except in one slide on its upcoming global oil and gas projects. The slide noted that an FID to develop the Tilenga and Kingfisher fields in Uganda is currently expected in "2020+".

"Total remains optimistic over the Ugandan project and the company continues to have discussions with the government [over the farm-down of Tullow's stake in the project]," a spokeswoman said.

She confirmed that Total expected the FID to take place in "2020 or after", despite official hopes by the Ugandan government that the partners will sanction the project in early 2020.

Farmdown deal

A $900 million deal for the UK's Tullow Oil to sell part of its 33.33% stake in the project to Total and China's CNOOC expired last year following long delays over agreeing fiscal and commercial terms with the government. Last month, cash-strapped Tullow confirmed that it still wanted to reduce its equity in the project before signing off on any development plans.

Tullow has said it wants to sell down most of its stake to Total and CNOOC to remain with around a 10% interest.

The Lake Albert project is expected to produce over 230,000 b/d when at peak production but relies on the construction of a 1,145-km (710-mile) export pipeline from the Albertine Graben to the port of Tanga in Tanzania.

Speaking in early November, Uganda's energy minister, Irene Muloni, said she still hoped to begin producing its first oil from Lake Albert in 2023. She conceded, however, that the target could be tough to meet due to the rift over the commercial terms for the project.

The government is also behind a planned 60,000 b/d refinery to be fed by the Lake Albert fields estimated to cost around $3 billion.