Tullow Oil is aiming to wrap up its farmdown process in Uganda to Total and CNOOC Ltd in the first half of this year as a tax issue remains unresolved.

The Anglo-Irish independent had hoped to finalise the farming down of a portion of its stake in the Lake Albert oil development equally to its French and Chinese partners before entering 2019.

However, this was complicated by a tax issue related to the process, with Uganda’s government saying in December it was only willing to sign off on the farmdown if Tullow paid the $167 million in taxes the Kampala administration claims is due.

In its second-half trading statement on Wednesday, London-listed Tullow said it and its partners continue to work with the Ugandan authorities on the farmdown deal, “which is now expected to complete in the first half of 2019”.

Tullow is aiming to drop to around 11% and relinquish any operatorship. State player Uganda National Oil Company is in the process of backing in for a 15% stake, which would leave Total and CNOOC Ltd on around 37.5% each if the farmdown deal is approved. Both Total and CNOOC Ltd would be operators of different parts of the overall development.

Total and Tullow had already said late last year that a final investment decision on the first stage of development of the Tilenga and Kingfisher fields was seen in the first half of this year. Until late last year the partners had been holding out for a sanction before the end of 2018.

First oil on the development is still very much a moving target. Uganda’s Minister of Energy & Mineral Development, Irene Muloni, said at the Africa Oil Week conference in Cape Town in November: “Our initial target was for first oil in 2020. Unfortunately, that seems to have slipped and we are now looking at 2021.”

Lake Albert development set for more delays

However, even this latest target appears likely to be missed, as first oil is not seen until three years after sanction.

The first oil date of 2020 was itself a delay of three to four years on an initial estimate.

A Total spokesperson told Upstream late last year: “The project team is working toward (a final investment decision) by summer 2019. Production should start about 36 months after the final investment decision,” the Total spokesperson said.

Assuming a final investment decision is taken in the first half this year, this will push first oil out to 2022.

The development involves the Tilenga project (to be operated by French super Total), the Kingfisher project (to be operated by CNOOC Ltd) and a 1445-kilometre, 24-inch pipeline, the East African Crude Oil Pipeline (Eacop), to the Tanzanian port of Tanga.

However, the fate of this planned pipeline has not yet been finalised.

Uganda weighing up Tilenga impact report

Tilenga comprises eight fields with four main shallow reservoir zones. The project will feature about 419 development wells — 194 producers, 197 injection wells and 28 observers — to be drilled from 30 well pads. Some wells will be highly deviated or horizontal.

Plateau production of 190,000 barrels per day is set to be sustained for four to five years, with 857 million barrels justified for development.

Kingfisher also has four reservoirs, with production of 40,000 bpd to be sustained for six years and recoverable resources justified for the development of 196 million barrels. The 20 oil producers and 11 water injection wells will be drilled from four pads.

An associated refinery with expected throughput capacity of 60,000 bpd is in the pre-FEED phase, with FEED set to be completed by the end of next year and sanction targeted for mid-2020.