By Toyin Akinosho, in Lagos
Italian major, ENI, has encountered its first major opposition in its current acquisition binge across the African continent.
The Sale and Purchase Agreement (SPA) it signed with Heritage Oil, for a share in two of Uganda’s most prospective acreages now mean nothing, as Tullow Oil has exercised a right to buy Heritage’s entire stakes in Blocks 1 and 3A, which contain at least half of the 700Million barrels of oil already proved up in Uganda.
Tullow issued a press release saying it had served notice on Heritage on January 17, 2010, potentially wrecking ENI’s plan to build a new presence in Uganda.
The Ugandan bid was the third of ENI’s petroleum rights agreements across Africa in four months. In August 2009, it signed a strategic partnership with Congo’s Ministry of Petroleum “with the aim to develop the host country’s oil reserves”, according to ENI’s spokesmen. In September, 2009, ENI acquired operatorship of the offshore exploration permits Cape Three Point and Cape Three Point South (Eni 47.2%), off the Ghanaian coast. In December 2009, ENI announced it had signed the Sale and Purchase Agreement for the assignment of Heritage’s 50% interest and operatorship in Blocks 1 and 3A in Uganda, for a total amount of $1.35 billion, following the agreement reached last November by the two companies. About the time of the SPA agreement for Ugandan resources, ENI commenced production in Oyo field in deepwater Nigeria. This was the outcome of an agreement, signed in 2007, with the Nigerian Independent Allied Energy, for joint pursuit of opportunities.
In effect, in four months, ENI had concluded three petroleum rights deals and one field production, in four African countries.
With this bullish run on the continent, it can be assumed that ENI will go ahead to deal with Tullow Oil, to achieve the purpose which its SPA with Heritage was meant to. Only this time, it would be competing bend on with other investors, who have, like itself, been visiting Tullow’s data room. If the speculations were true that Tullow favours dealing with TOTAL or ExxonMobil, then the Italian major faces a real challenge. The treasures in Uganda may well be worth a bruising battle: “Over the last six years, Tullow and Heritage have invested over US$700 million in the Lake Albert Rift basin in drilling 27 wells to prove up over 700 million barrels of oil and identify over 1.5 billion barrels of potential yet to be explored”, Tullow said in its pre-emption statement.