* Govt to announce agreement in "coming days"
* Repossessed fields are set for return - govt source
By Elias Biryabarema and Barry Malone
KAMPALA, March 7 Uganda has resolved a tax
dispute with Tullow Oil (TLW.L), sources for the government and
the company said, paving the way for Tullow to sell stakes in
exploration assets to France's oil major Total (TOTF.PA) and
Chinese group CNOOC (0883.HK).
"The Ugandan government proposed that, as long as it has a
guarantee that Tullow will pay the remaining taxes, it has no
problem with its proposed partnerships with Total and Cnooc,"
the energy ministry source said.
"I am aware Tullow has responded positively to that
arrangement and I think formal announcements on either side are
coming within days."
A Tullow source told Reuters the company was aware of the
offer and keen to reach an agreement with the Ugandan
government within days.
The breakthrough will allow Tullow, one of Europe's top oil
explorers after a series of big finds in Uganda and Ghana, to
embark on a $10 billion development programme that will see
Uganda start pumping crude next year.
The tax dispute arose after London and Toronto-listed
Heritage Oil HOIL.L early last year sold its Ugandan
properties -- exploration blocks 1 and 3A -- to Tullow with
which it co-owned the assets on a 50 percent basis.
Uganda had refused to endorse the deal until Heritage paid
$404 million in capital gains tax on the $1.45 billion it
earned from the sale.
Uganda, East Africa's third biggest economy, discovered
commercial quantities of hydrocarbons in the Albertine rift
basin along its border with the Democratic Republic of Congo in
2006. Oil companies estimate reserves of up to 2.5 billion
After a protracted battle, Heritage made a down payment of
$121 million in July and deposited the remaining $283 million
in an escrow account in London to be paid to the government
"As part of the agreement the government also decided to
return the Kingfisher oil field and exploration area 3A to
Tullow Oil and I think the two will not be part of the new
licensing round coming later this year," the energy ministry
The government repossessed the Kingfisher field and field
3A after their licenses expired but the move was seen by
analysts as an attempt to pressure Tullow.
It is unclear whether the Ugandan government will plump for
international arbitration to resolve the dispute with Heritage
or go to the local courts.
Analysts say Uganda favours local resolutions because it
lacks the cash and legal expertise to slog it out with Heritage
in international courts.