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Tullow to challenge Ugandan court order to pay $407 mln tax bill

  • SOURCE: | qwesa2big
  • courtBritish explorer Tullow Oil said on Wednesday it planned to challenge a Ugandan tax tribunal decision ordering it to pay a $407 million tax bill in relation to a 2012 sale of oil field stakes.

    Tullow Oil said it had already paid $142 million of the overall bill, which relates to its disposal of stakes in Ugandan oil fields to the China National Offshore Oil Corporation and France’s Total.

    “Tullow believes that the (Tax Appeals Tribunal) has erred in law and Tullow will challenge the EA2 assessment through the Ugandan courts and international arbitration,” Tullow said in a statement.

    It added that it still hopes it can resolve the matter through further negotiations with the government.

    Tullow Oil has exploration concessions in neighbouring Kenya and across Africa. Its east African finds are among a string of hydrocarbon discoveries in the region that have made the area a hot property for oil and gas firms.

    Chief Executive Aidan Heavey said the tax tribunal ignored an agreement Tullow had signed with Uganda’s former energy minister and that this agreement was partly why over the last 10 years the company had spent $2.8 billion exploring for oil.

    “This money was spent by Tullow on the understanding that our contracts with the Government, which contained important incentives to invest that were vital at a time when no oil had been discovered in Uganda, would be honoured,” Heavey said.

    At 1515 GMT, Tullow shares were trading at 776.5 pence per share, down 1.7 percent. The benchmark FTSE 100 index was up 1 percent.

    Uganda expects to start pumping crude from its Albertine rift basin, where Tullow operates, in 2017.

    Officials estimate Uganda’s crude reserves at 3.5 billion barrels, although only about 30 percent of the Albertine basin has been explored. The region lies along the border with the Democratic Republic of Congo.

    Source: Reuters

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