Russia's RT Global Resources Pulls Out of $4 Billion Ugandan Refinery Project
July 01 2016 - 9:37AM
Dow Jones News
By Nicholas Bariyo
KAMPALA Uganda--Russia's RT Global Resources has pulled out of
talks over the construction of Uganda's maiden oil refinery,
casting further doubt over the future of the $4 billion project,
officials said Friday.
Uganda's energy and minerals ministry announced that the talks
had broken down after RT Global Resources, a unit of Russia's
state-owned Rostec Global Resources insisted on renegotiating
"issues that had already been agreed between the parties."
The breakdown is the latest setback to hit Uganda's oil
industry, which could further complicate long delayed plans to
develop East Africa's largest crude reserves.
"Government was left with no choice but to halt negotiations and
draw the bid bond" a spokesman for the ministry said in a
statement.
RT Global Resources was selected last year ahead of South
Korea's SK Engineering and Construction Co. The Russian firm has
since been in talks with Ugandan officials over the 60,000
barrels-a-day plant, which is expected to be constructed along the
country's western border with Congo.
Company officials could not be reached for an immediate
comment.
Officials close to the talks said that the Russian company
pushed for last minute government tax breaks before signing the
final deal, hobbling the negotiations.
The Energy Ministry said the government would now proceed to
invite the plant's alternative bidder, SK Engineering.
The winning investor is expected to hold a 60% stake in the
plant with, Uganda retaining the option of selling part of its 40%
interest to the neighboring states of Tanzania, Kenya and
Rwanda.
The U.K.'s Tullow Oil PLC (TLW.LN), France's Total SA (TOT) and
China's Cnooc Ltd.(CEO) are currently in the process of developing
the 6.5 billion barrels of oil fields. Output from the fields was
initially expected by 2018 but is now not expected until 2020.
Write to Nicholas Bariyo at Nicholas.Bariyo@wsj.com
(END) Dow Jones Newswires
July 01, 2016 09:22 ET (13:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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