Irish-listed oil explorer Tullow Oil has agreed to pay out $250m (€220m) to settle a Capital Gains Tax dispute with the Ugandan government and the Uganda Revenue Authority (URA).
Tullow disputed the URA's assessment of $473m of CGT payable following farm-downs to France's Total and China's CNOOC. Tullow paid 30pc of the assessment, about $142m, as required by law prior to launching an appeal to the Ugandan Tax Appeals Tribunal (TAT) against the assessment.
The firm also commenced an International Arbitration in September 2013.
Last July, the TAT rejected Tullow's appeal and assessed Tullow's CGT liability for the farm-downs at $407m less $142 million previously paid. In its 2014 accounts, Tullow recorded a contingent liability of $265m in relation to the dispute.
Tullow subsequently appealed the TAT ruling to the Ugandan High Court and continued with its International Arbitration claim. Following the settlement, both these legal proceedings have been withdrawn.
The full settlement amount is made up of the $142m that Tullow paid in 2012 and $108m to be paid in three equal installments of $36m. The first of these was paid upon settlement and the remainder will be paid in 2016 and 2017.
Tullow chief executive Aidan Heavey said: "The settlement of this long-running dispute is good news for Tullow and Uganda. In recent months, the Government of Uganda has proposed welcome and necessary changes to its tax regime for oil and gas investments which it is hoped will enable substantive progress to be made towards the sanction of the Lake Albert oil development."