2010-04-05
KAMPALA (Reuters) - Explorer Heritage Oil has expressed concern at Uganda's slow pace in approving the sale of Heritage's assets to London-based explorer Tullow Oil.

The east African country discovered oil in 2006 in the Lake Albert region along the border with the Democratic Republic of Congo, DRC, and production is expected to begin later this year. Exploration companies estimate reserves at 2 billion barrels.

Tullow is in the process of acquiring Heritage's 50 percent equity in two jointly owned exploration blocks -- 1 and 3A -- and has applied to the government to sell stakes on to the China National Offshore Oil Corporation, CNOOC, and France's Total.

A top Ugandan energy official had said that the government expected to deliver its decision on the purchase of Heritage's assets by April.

In a March 23 letter to Uganda's Energy Minister Hilary Onek seen by Reuters on Monday, Heritage asked the government to explain why there was a delay in approving the sale.

"There can be no doubt now that written consent has been withheld or delayed," Heritage said.

"We would therefore be grateful for your explanation as to what are the reasons ... causing written consent to be withheld or delayed."

Ugandan officials were not immediately available for comment.

Heritage said previous discussions with government officials had made them believe that government approval would be completed in time for completion of the transaction by the end of March.

In its letter, Heritage reiterated its commitment to the transaction, but said delaying it could hurt Uganda's image abroad as an investment destination.

"Delays will also put the assets themselves at risk because while the proposed sale to Tullow is effectively in limbo, government cannot expect significant investment or activity to be pursued in the blocks," it said.

Tullow gave assurance that while there was a delay in completing the process, it was going smoothly.

"The purchase and sale process has the unequivocal support of the Government of Uganda," Brian Glover, its Uganda country manager, said in a text message to Reuters.

"And while the approval process is taking longer than we and Heritage might have hoped, it is proceeding satisfactorily and in a normal fashion."