CEO Cnooc Ltd

By Nicholas Bariyo

KAMPALA Uganda--Tullow Oil PLC (TLW.LN)'s new sales process to reduce its stake in Uganda's Lake Albert oil project must fulfill the country's tax obligations, Uganda's energy and minerals ministry said Friday.

The UK-based energy company said Thursday that its plans to sell a stake in its project in Uganda, which produces 230,000 barrels of oil a day, to Total S.A. (FP.FR) and CNOOC Ltd. (0883.HK) has been called off because it had been unable to reach certain agreements on taxes with Ugandan authorities. Tullow added that it plans to begin a new sales process to reduce its 33.33% stake in the assets.

But Ugandan authorities said tax obligations on the sale must be complied with, in accordance with Ugandan laws.

Uganda's latest stance could re-establish a standoff that has stalled the $900 million deal, initiated in 2017.

"We are ... confident that as Tullow moves to re-initiate a new sales process the joint-venture partners will remain committed to fulfilling their tax obligations," Robert Kasande, the ministry's permanent secretary, said in a statement. Mr.Kasande added that the government would continue working with the joint-venture partners to ensure the final investment decision on the projects is achieved at the earliest time, "in a manner that safeguards the country's interests and sovereignty."

Another standoff could potentially hamper the development of Uganda's already delayed oil fields, estimated to contain some 6 million barrels of crude.

Write to Nicholas Bariyo at Nicholas.bariyo@wsj.com

(END) Dow Jones Newswires

August 30, 2019 02:38 ET (06:38 GMT)

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