late yesterday positive news from Dow Jones Newswires on this...

late yesterday positive news from Dow Jones Newswires on this issue;

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DJ Uganda President Gives Initial Ok To Let Tullow Deal Through-Source
19 Oct 2010 - 13:24
By Nicholas Bariyo

Special to DOW JONES NEWSWIRES

KAMPALA, Uganda-(Dow Jones)- Uganda President Yoweri Museveni gave preliminary approval to allow Tullow Oil PLC (TLW.LN) to sell oil stakes to China's CNOOC (CEO) and French oil major Total SA (TOT) and to delink the asset-transfer transaction from an ongoing tax dispute that had delayed the deal, a Uganda government source said Tuesday.

Museveni signalled his willingness to accept the compromise sought by Tullow in an a weekend meeting with the company, said a Uganda government source.

"It was agreed that the tax dispute with Heritage be delinked from Tullow's plans to form a joint venture with CNOOC and Total," said the Uganda official.

Tullow has been working with Uganda officials to allow the Total and CNOOC deals to close and to delink the issue from an ongoing dispute between Uganda and Heritage Oil PLC (HOIL.LN) over capital gains taxes.

In July, Heritage sold its half of stakes in blocks 1 and 3A in the Lake Albert basin to Tullow for up to $1.45 billion, but Heritage declined to pay a 30% capital gains tax on the transaction. In the wake of the dispute, the Uganda government withheld its endorsement of the deal, preventing Tullow from bringing in new partners.

Tullow has already paid $1 billion to Heritage for the purchase. A third of the $405 million in disputed tax has been paid to the Ugandan authorities, and the remainder is in an independently administered escrow account.

Tullow has drafted a memorandum of understanding to delink Tullow's plans to divest to Total and CNOOC from the Heritage tax dispute. President Museveni gave his preliminary approval to the memorandum out of concern the delay was negatively impacting the plans of CNOOC and Total, the Uganda official said. The memorandum of understanding will also be discussed at a subsequent meeting scheduled for today between Tullow and Uganda officials with the Ministry of Energy and Minerals, Uganda officials said.

Museveni will also still need to give final approval to the memorandum of understanding, officials said.

Uganda Junior Minister of Energy and Minerals Development Peter Lokeris said Monday that negotiations between Tullow and Uganda on how to resolve the Heritage dispute were on track, but declined to comment on specific details.

Tullow officials could not be reached for comment Tuesday.

-By Nicholas Bariyo, contributing to Dow Jones Newswires; 256-75-2624615 [email protected]