Tullow Oil, which earlier in the week reported a disappointing well result from Ethiopia, has slipped back after a tax appeals tribunal in Uganda ruled against the company on a key issue regarding capital gains payments.
The tribunal calculated Tullow's liability is $407m, of which $142m has already been paid. Tullow said it believed the tribunal had erred in ruling that the then ministry of energy did not have the authority to allow a tax exemption, and would challenge the ruling through Ugandan courts and international arbitration. Chief executive Aidan Heavey said:
Tullow is very concerned by this ruling which ignores a contractual term signed by a government minister in Uganda. Tullow is Uganda's largest foreign investor and a major taxpayer. Over the last 10 years, Tullow has spent $2.8bn in Uganda and discovered 1.7bn barrels of oil. This money was spent by Tullow on the understanding that our contracts with the government, which contained important incentives to invest that were vital at a time when no oil had been discovered in Uganda, would be honoured. We will now carefully consider all our options to robustly challenge this ruling.
Tullow shares have fallen 11.5p to 778.5p.
