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The David and Goliath battle for the purchase of the rights to two oil blocks in Uganda being sold by Heritage Oil has swung firmly back in favour of Goliath after the Italian supermajor Eni offered the Ugandan government a cash windfall of US$300 million to approve its bid.
UK newspaper The Sunday Times reported that Eni and the UK-based oil explorer Tullow have each made $1.5 billion bids for the two blocks in the Lake Alberta basin in the west of the African state. Now it is up to the Ugandan government to ratify one of the offers.
Heritage Oil had agreed to sell it’s interests to Eni in November, but a clause in the contract it has with Tullow, its joint venture partner at Lake Alberta, meant that the company could exercise its right to match any offer from an outside bidder.
However, Tullow’s decision upset the Ugandan government who are worried about one company developing a de facto monopoly of its oil industry.
It is believed that most if not all of the additional money being offered by Eni will go to the Ugandan government.
Eni also has its vast spending power in its favour and has pledged to build a 1300km pipeline and oil refinery if its bid is successful. Tullow could not match this unless it brought in outside investment.
The oil find at Lake Alberta is the largest onshore field in sub-Saharan Africa.
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