The week ended with Cnooc poised to take over more of Africa’s oil provinces, in the minds of some, as reports indicated the Chinese state-owned oil company was “in talks” with the Ugandan government about investing with London-listed Tullow Oil to develop the Lake Albert fields in western Uganda.
A person close to Tullow said, “the process is in its early stages, and negotatiations are ongoing with the Ugandan government.” He pointed out that several companies were arriving in Kampala to sniff out what Tullow and Heritage, its joint venture partner, have proven to be a sizeable, if logistically difficult, new oil region in central Africa. The Ugandan government is key to any development deal, so it make sense for companies to be talking to them first, he said.
No data room has opened yet concerning a Tullow joint venture for Lake Albert’s commercial development, which includes a pipeline of over 1,000km from the interior to the port of Mombasa.
Cnooc, acting like any oil major intent on signalling possible interest, is far away from emerging as Tullow’s partner. But it makes sense as a partner for several reasons. Its interest in Africa is as obvious as peer Sinopec’s. News broke in the FT this week of Cnooc’s talks with the Nigerian government over bidding for a swathe of oil blocks there. Also Cnooc is a midstream producer, with more refining, engineering and pipeline experience. The pipeline is key to the fields’ commerciality.
Four months ago Heritage Oil, Tullow’s JV partner proving up the Lake Albert fields, discussed with the FT possible development partners for building a pipeline. Is said there was firm interest from a number of Asian companies. Part of their interest, he said, came from the amount of spare engineering and capacity in China. Chinese companies, he said, were eager to find outlets such as 1,000 pipeline to employ their people and companies.
Meanwhile, Cnooc’s interest in Nigeria has provoked a sharp letter to the FT.