French supermajor Total has frozen all activity on the proposed $3.5 billion scheme to develop Uganda’s Albertine Graben oilfields for export via a 1444 kilometer pipeline from Hoima on Lake Albert to Tanzania’s Indian Ocean port of Tanga.
Citing uncertainty over the transaction, Total’s move follows the collapse last week of a $900 million farm-down deal under which Anglo-Irish independent Tullow Oil sought to partially offload equity to partners Total and the CNOOC International.
Tullow has now been forced back to the drawing board, while Total this week emailed contractors to suspend all further activity until further notice.
Paris-based Total has been contacted for a response to the development, first reported by local media.
At issue is the government’s insistence that around $200 million in capital gains tax (CGT) must be paid on the farm-down and whether tax relief is applied, but issues still surround preparation to secure the route for the export pipeline including the host agreements with participant states.