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Total said it would pay $575 million for Tullow’s 33.33 percent stake in the Lake Albert project and proposed East African Crude Oil Pipeline (EACOP), which is to run through Tanzania./COURTESY

Energy

Total to raise stake in controversial Ugandan project

PARIS, France, Apr 24- French oil giant Total said Thursday it was raising its stake in an Ugandan oil project denounced by rights groups and environmentalists, through an asset-sale deal reached with UK’s Tullow.

Total said it would pay $575 million for Tullow’s 33.33 percent stake in the Lake Albert project and proposed East African Crude Oil Pipeline (EACOP), which is to run through Tanzania.

Total said it would make an inital payment of $500 million, and the remainder “when the partners take the Final Investment Decision to launch the project. 

“In addition, conditional payments will be made to Tullow linked to production and oil price, which will be triggered when Brent prices are above $62” a barrel, a Total statement said.

Oil prices are currently languishing at around $20 a barrel.

“The terms of the transaction have been discussed with the relevant Ugandan government and tax authorities and agreement in principle has been reached on the tax treatment of the transaction,” it added.   

Struggling Tullow had launched negotiations with Total and China’s CNOOC to offload its stake but they stalled last year over tax issues.

CNOOC, the third partner in the 230,000 barrel per day project, has pre-emption rights for half of the stake to be sold to Total.

Six French and Ugandan NGOs tried to force Total to review its participation in the two projects, led by CNOOC, over concerns that they would displace thousands and harm the environment.

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French NGO Les Amis de la Terre, or Friends of the Earth, said there would be “serious infringements of human rights,” evoking the “expulsion of tens of thousands of people” and extensive environmental damage.

Total replied that its “vigilance plan” for the projects conforms to law and “respects the rights of local communities.”

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