As Tullow Oil plc ponders the next move in Uganda regarding failed talks on its farm-down tax negotiations, it has announced the appointment an experienced executive in the names of Martin Greenslade who will serve as a non-executive director with effective November 1, 2019.
Martin has also been appointed as a member of the Audit Committee and will stand for election to the Board at the 2020 Annual General Meeting (AGM).
Meanwhile, Steve Lucas, non-executive Director, will step down from the Board following the conclusion of the Group’s 2020 AGM, after eight years with Tullow. At the same time, Martin Greenslade will be appointed Chair of the Audit Committee.
Martin brings extensive financial experience to Tullow from his current position as Chief Financial Officer and member of the Board of Land Securities Group plc which he has held since 2005. Martin, a qualified accountant, also brings multi-sector experience to the Group from senior positions held in real estate, financial services, defence and manufacturing. He is currently a Trustee of International Justice Mission UK and was Group Finance Director of Alvis plc from 2000-2005.
“I am delighted to welcome Martin to the Board of Tullow, where he will bring important insight and diversity of thought from both his current position as Chief Financial Officer of Land Securities and his extensive experience from other sectors. His timely appointment will allow for a suitable handover of Audit Committee responsibilities ahead of Steve Lucas stepping down in April next year.” Dorothy Thompson, chair of Tullow oil plc
According to directors’ declarations pursuant, there are no further disclosures required under Rule 9.6.13R of the Listing Rules of the UKLA and 6.6.7 of the Listing Rules of the Irish Stock Exchange in respect of the appointment of Martin Greenslade.
On August 29, 2019, Tullow Oil announced the termination of its farm-down to Total and CNOOC, following the expiry of the Sale and Purchase Agreements (SPAs).
The termination of this transaction was a result of Tullow Oil being unable to agree all aspects of the tax treatment of the transaction with the Government of Uganda which was a condition to completing the SPAs.
While Tullow’s capital gains tax position had been agreed as per the Group’s disclosure in its 2018 Full Year Results, the Ugandan Revenue Authority and the Joint Venture Partners could not agree on the availability of tax relief for the consideration to be paid by Total and CNOOC as buyers.
Tullow now plans to initiate a new sales process to reduce its 33.33% Operated stake in the Lake Albert project which has over 1.5 billion barrels of discovered recoverable resources and is expected to produce over 230,000 bopd at peak production. The Joint Venture Partners had been targeting a Final Investment Decision for the Uganda development by the end of 2019, but the termination of this transaction is likely to lead to further delay.
Announcing the collapse of talks in August Paul McDade, chief executive officer, commented then that: “Tullow has worked tirelessly over the last two and a half years to complete this farm down which was structured to re-invest the proceeds in Uganda. Whilst this is a very attractive low-cost development project, we remain committed to reducing our operated equity stake. It is disappointing to report this news at a time when we are making so much progress elsewhere towards the growth of the Group with our recent oil discovery in Guyana and the first export of oil from Kenya.”
The termination of tax talks created anxiety among many stakeholders including the media, civil society organizations, business community and the general as Tullow (Tullow Uganda Operations Pty Limited and Tullow Uganda Limited) was farming down some of its interests to Total E&P Uganda B.V and CNOOC Uganda Ltd for its interests in Blocks EA1, EA1A,EA2 and EA3A. The expiry of this transaction occurred before resolution of the outstanding issue between the Government and the Partners regarding some aspects of the tax treatment of the transaction.
Uganda Revenue Authority issued Tullow with assessed of US$ 167.8 million in Capital Gains Tax (CTG) arising from the sale of US%900 million. Tullow Oil had sought to take home US$200 million in cash while the remaining US$700 million would be reinvested by Total and CNOOC, the reason why joint ventures partners the tax levied is unfair, given that they have not recovered capital costs.
The failure by both partners to agree on tax treatment of the transaction value forced the companies to delay the final investment decision (FID) that would have propelled plans for the construction of the East Africa Crude Oil Pipeline (EACOP) from Hoima in Uganda to the Port of Tanga in Tanzania.
“Government is fully aware that, the above developments affect the taking of the Final lnvestment Decisions (FID) which were expected late this year and/or next year. The FID would give way to the Engineering Procurement and Construction (EPC) phase of the projects that would be characterized by the award of contracts to providers of the required goods and services for construction of the facilities. Failure to take FID affects our obligations with the developers of the Refinery who cannot proceed with the development without certainty of crude oil availability,” Energy Minister Irene Muloni said recently.
Other projects affected by pull out of EACO are; The Tilenga Project, which includes the Central Processing Facilities, the drilling pads, flowlines located in Buliisa and Nwoya Districts and the Kingfisher Development Area (KFDA) which will include the Central Processing Facilities, the drilling pads, flowlines in Kikuube and Hoima Districts.
The impasse between government and the companies has caused anxiety amongst local subcontractors who had invested their money in anticipation that the projects would begin soon and hence get tenders for supply of goods and services.
