The Ugandan government has approved a joint venture development involving Tullow Oil, Total and China National Offshore Oil Corporation (CNOOC), Dow Jones reported.

Bill Lehane and news wires  13 September 2011 09:41 GMT

The deal will allow the trio to tap into three oil blocks in the country’s oil-rich Lake Albertine rift basin estimated to hold at least 2.5 million barrels of oil.

"We have already approved the oil production sharing agreements and formal signing will take place this week", Ugandan junior energy and minerals minister Peter Lockeris told the wire service, without specifying a precise date.

The Ugandan administration has been in talks with the London-listed company, the French major and the Chinese oil and gas company since March as the country prepares to join the ranks of the world’s oil producing nations.

Predicting the deal’s conclusion would happen in September, London-listed Tullow said last month it would receive $2.9 billion from Total and CNOOC in return for farming down its 100% working interest.

It had originally hoped to conclude the deal within weeks of signing sale and purchase agreements in March, but the venture has been held up due to a separate tax dispute over Tullow's acquisition of two of the blocks from Heritage Oil.

The three companies, who will now hold an equal share in all three blocks, are expected to invest at least $10 billion to develop the oil assets.

The plans include the construction of a 1,300 kilometre pipeline to the Kenyan port of Mombasa, as well as an oil refinery.

Published: 13 September 2011 09:41 GMT  | Last updated: 13 September 2011 09:41 GMT

Source:upstreamonline