Oil Field Tax Saga Rolls On In Uganda


The complicated row over tax involving lucrative oil fields in Uganda took another twist last week after Heritage Oil begun arbitration proceedings in London against the Ugandan government.

The dispute concerns Heritage’s sale of oil blocks to London-quoted Tullow Oil last year for $1.45 billion.

Britain’s Financial Times newspaper said that “Uganda only sanctioned the deal after Heritage agreed to put some $404 million — the amount that it claims Heritage owes in capital gains tax — aside from the sale pending arbitration.”

However, Heritage said $121 million had been deposited with the Ugandan tax authorities and a further $283 million was in an escrow account. Both sums, it insisted, were recoverable.

Heritage told the FT that “whilst [it] has sought to resolve the issue without resorting to arbitration, it has been left with no alternative but to take this step.”

The announcement comes just a month after Tullow launched legal action against Heritage in an attempt to recover $313 million of tax payments made by Tullow to the Ugandan government to facilitate a separate deal. Heritage has denied it owes anything.

The FT says that the “payments were widely seen as crucial for Uganda to sanction Tullow’s subsequent $2.9 billion deal with China’s Cnooc and France’s Total in March.” This deal opened the way for them to develop oil reserves in the Lake Albert basin.