Friday 23 March 2018

Tullow shares plunge 4.7pc on back of new delay in Ugandan deal


Thomas Molloy

SHARES in Tullow Oil plunged in Dublin yesterday after Ugandan lawmakers voted to delay approval of Tullow's sale of its stake in three exploration blocks to Total and Cnooc while new laws are made in response to corruption allegations.

Shares closed down 4.7pc at €15.38 in Dublin as investors digested the news that the parliament in Kampala voted for an investigation into alleged bribery in the oil industry.

New oil deals are barred until the "necessary laws" are instituted, lawmaker Ibrahim Semujju Nganda said.

Parliament voted on Tuesday to form a committee to investigate three ministers for alleged corruption during the award of oil concessions.

Prime Minister Amama Mbabazi, Foreign Affairs Minister Sam Kutesa and Internal Affairs Minister Hillary Onek, who was moved from the energy ministry earlier this year, have denied lawmaker Gerald Karuganga's accusations they took bribes in the award of oil concessions.

Tullow expressed "dismay at the accusations made against Tullow under the protection of parliamentary privilege". Yesterday, the prime minister dismissed documents produced by the opposition as forgeries. Junior energy minister Peter Lokeris said the votes will have no impact.

Dublin and London-listed Tullow announced in March that it agreed to sell stakes in three oil blocks to Total and Cnooc for $2.9bn (€2.09bn), giving each company a third of exploration areas 1, 2 and 3A in Uganda's Lake Albert Basin.

The transaction was scheduled for approval on Saturday, lawmakers said during the debate.

Shares in Tullow have risen and fallen as investors fretted about delays to the deal.

Lawmakers demanded the government come up with new laws to govern the oil sector in 30 days and abolish confidentiality clauses to weed out corruption.

Uganda has an estimated 2.5 billion barrels of oil, with more than one billion already discovered, according to Tullow.

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