Tullow set to get government approval on Ugandan oil deal

SHARES in FTSE 100 oil explorer Tullow Oil jumped yesterday after analysts predicted the company would have little trouble persuading the Ugandan government to accept its offer to buy $1.35bn (£827m) worth of oil fields in the country from its partner Heritage Oil.

The stock closed up 2.24 per cent at 1,369p on the London Stock Exchange, after Tullow on Sunday exercised its pre-emption right to buy the oil deposits from Heritage, scuppering its previously-agreed deal to sell the assets to Italian oil firm Eni.

Tullow is set to sell around a fifty per cent stake in the fields to another international oil major, most probably US giant ExxonMobil.

It still needs to get the green light from the Ugandan government, though analysts said yesterday that approval should be forthcoming.

“Whilst Eni can still come back with a higher offer, we see limited completion risk given Tullow’s strong local relations,” said BoA Merrill Lynch in a note.

“If Tullow can assure the government that another major is committed to farming in and developing Uganda’s resources, we do not believe the government will veto the deal,” said Cazenove analyst Jessica Saadat.

The Lake Albert region is thought to contain over 2bn barrels of oil.