A farm down from cash stressed oil company Tullow in Uganda to the French giant Total is nearing a year since it was announced without approval from the government. Industry sources suggest the Joint Venture Partners ( Total, Tullow, and CNOOC) may have aligned their position on the terms of the approval.

Initially when Tullow announced its intention to farm down to Total – it was CNOOC ( encouraged by the government this website understands) that held up the deal by exercising its right of pre-emption. Months passed by however and it is not clear if CNOOC will follow through.

Government officials are not satisfied with the terms of the transaction which transfer assets between the two European oil companies without much tax revenue. Total intends to avoid Capital Gains Tax for the deal which was announced as amongst others an investment contribution by Tullow – simply held by Total in the meantime.

Separately government sources say the French Oil company proposed paying administrative fees of USD 40 thousand . One official said they rejected on the face of it the argument that the transfer of the value in the assets from Tullow to Total would be held as an investment in the East African Crude Oil Pipeline Project.

There is considerable angst within Ugandan official circles about the influence Total has exercised in getting the deal done quietly thereby putting itself in the position of a virtual monopoly on the Ugandan oil deal.

As the pipeline project gets underway – the efforts to hold that influence in check will probably throw wrinkles in the smooth running of the development phase of the oil project in Uganda.