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Tullow blocks Eni in Ugandan oil fields

Published:Wednesday | January 20, 2010 | 12:00 AM

Britain's Tullow Oil PLC said Monday it will exercise its pre-emptive right to buy 50 per cent of two Ugandan oil fields from Heritage Oil PLC for US$1.5 billion, potentially blocking a bid by Italy's Eni SpA.

Tullow and Heritage each own a half share in the two fields in the oil rich Lake Albert Basin and Heritage had agreed in November to sell the stake to Eni for up to US$1.5 billion.

But under the terms of Tullow and Heritage's joint exploration venture, Tullow had the right to pre-empt any offer for Heritage's half by matching the price offered by any other bidder.

The Ugandan government will be the final arbiter after shareholders vote on the proposal at a meeting scheduled for Jan. 25.

Tullow said it has tapped its bankers to match Eni's offer of US$1.35 billion cash and a deferred payment of US$150 million in either cash or an interest in a producing oil field.

"Tullow is committed to retaining a material stake in Uganda and to continue to invest for the long term," the company said in a statement. "As we enter the development phase we are working closely with the Ugandan government to introduce a mutually beneficial partner with downstream expertise who is aligned with this long term approach."

Eni had hoped the acquisition would be part of its expansion in sub-Saharan Africa. It also has interests in Angola, Nigeria, Gabon, Mozambique and the Republic of Congo.

- AP