Tax dispute forces Tullow Oil to abandon drilling in Uganda

City A.M. Reporter

ORER Tullow Oil said a dispute with the government of Uganda had forced it to abandon drilling at two oil-rich blocks near Lake Albert and that it was unsure when this would recommence.

The London-based company added that the government was wary of agreeing to a plan to decouple Tullow’s dispute from another, potentially lengthier, dispute between the government and Tullow’s former partner, Heritage Oil, which could delay a return to drilling.

“We have no definitive timeline (for a resolution),” chief operating officer Paul McDade said.

Tullow bought half-shares of two oil blocks from Heritage earlier this year, giving it 100 per cent ownership of three blocks which cover the Ugandan side of Lake Albert and which Tullow believes could contain billions of barrels of oil. Heritage refused to pay capital gains tax on the sale, which the government and Tullow said was due, and subsequently the government refused to renew the licences for Tullow which had planned to sell stakes to France’s Total and China’s CNOOC. The licence dispute has forced Tullow to halt operations at the blocks.