CNOOC considers Hoima refinery investment and operatorship of Uganda pipeline – VP

28 Sep 16 – China National Offshore Oil Corporation [NYSE:CEO; CNOOC], is considering investing in Uganda’s Hoima refinery, and taking operatorship of the country’s oil pipeline, Vice President Hongbo Zhou said.

The Hoima refinery is a USD 4bn project being developed under public-private partnership, under which a Russian consortium led by Rostec was awarded a 60% stake in 2015. The consortium walked away from the project in July, citing differences of opinion with the Ugandan government.

The government has since embarked on finding a replacement, and Mergermarket reported in August it has approached South Korean firm SK Energy [KRX:03600].

The Ugandan government has also reached out to CNOOC, Zhou told Mergermarket, and the Chinese firm is considering investing in Hoima. It would, however, feel more comfortable with the project if several other parties also joined, enabling CNOOC to take a stake smaller than the 60% on offer, Zhou said.

In addition to this, CNOOC could consider taking on operatorship of Uganda and Tanzania’s USD 3.5bn oil pipeline project, Zhou said.

It was previously reported that the Chinese giant had pledged to invest in the project.

Construction of the pipeline has been subject to delay, and CNOOC is eager to progress the project, Zhou said.

“CNOOC is definitely investing in it, as the pipeline needs to be up and running to facilitate Uganda’s upstream activities,” Zhou added.

CNOOC, Total [NYSE:TOT] and Tullow [LON:TLW], each hold 33.33% in three oil blocks in Uganda’s Albert basin. To balance the operatorship responsibility between the three partners, Total became the operator in Block-1, Tullow in Block-2 and CNOOC in Block-3A –  which it renamed Kingfisher.

While CNOOC intends to hold on to its one-third stake in each of the blocks in the Albert Basin, it may consider selling down its stakes in Block-1 and Block-2, as Kingfisher is CNOOC’s focus, Zhou added. 

CNOOC has a market capitalisation of USD 52.82bn.

by Katie McQue in Dubai

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