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Tullow Oil has finally exited the Uganda market, after selling its assets worth $500 million (Sh54.5 billion), to French firm Total.

The firm, which also has interest in Kenya and has operated in Uganda since 2004, will receive a further $75 million (Sh8.2 billion) when a Final Investment Decision (FID) is taken on the development project, plus contingent payments linked to the oil price payable after production starts.

“The closing of this transaction follows the satisfaction of all deal conditions, announced on 21 October 2020, which included the execution of the binding Tax Agreement, the approval for the transfer of Tullow’s interests to Total and the transfer of operatorship for Block 2,” the company said in a statement on it’s website.

Although Tullow will retain a financial link to the development project through the potential contingent payments, the closing of this transaction marks Tullow’s exit from its licences in Uganda after 16 years of operations in the Lake Albert basin.

Lokichar Basin

Under the terms of the deal, Total has acquired all of Tullow’s existing 33.33 per cent stake in each of the Lake Albert project licenses and the proposed export-pipeline system that passes through Tanzania.

Tullow, which has been prospecting for oil in Kenya’s Lokichar Basin since 2012, has a net debt of $2.4 billion (Sh261 billion) and available liquidity of $1 billion (Sh109 billion).

In 2019, the Uganda oil project suffered a major setback after Total SA terminated activities related to the pipeline, following the collapse of a deal to buy a stake in Tullow Oil Plc interests in the Lake Albert Development Project.

Total, which also owns a significant stake in Kenya’s oil block, has refused to commit its share of the Turkana budget for the 2020 financial year amid concerns it wants out.