The development of Uganda's oil fields could be delayed by Italian company Eni SpA's (E) proposed plan to participate, officials at Tullow Oil Uganda Ltd. said Tuesday.

Eni's proposed takeover of Heritage Oil PLC's (HOIL.LN) interests in the Ugandan side of the Albertine Rift has already hampered Tullow's bid to "farm down" or sell a stake to finance the project to other partners, the Tullow official told Dow Jones Newswires.

The Eni move has disrupted the ongoing review of exploration data of Tullow's two blocks in the area by potential investment partners, said the official of Tullow Oil Uganda, a unit of U.K.-based Tullow Oil PLC (TLW.LN).

"We remain determined to exercise our pre-emptive rights in Eni's proposed takeover of Heritage Oil. It's in the best interests of the country's plans to develop its oil sector," the official said.

Eni and Heritage Oil couldn't comment immediately.

Brian Glover, Tullow Oil Uganda's country manager, has told Dow Jones Newswires that since there are two commercial activities ongoing in Uganda's oil sector--Heritage's sell down and departure, and Tullow seeking a new partner--there is an opportunity to harmonize these approaches.

"Thus pre-emption for us could be the first step, followed by a farm-down across all blocks," he said.

Tullow Oil owns Blocks 1 and 3A jointly with Heritage and it's the sole owner of block 2. The three blocks are estimated to contain at least 2 billion barrels of oil.

Uganda wants to start oil production and refining in the next two to three years, according to government officials.

Tullow Oil expects to have its oil wells in Block 2 ready for development by next year. The company also expects to start work on a gas-fired 50-megawatt power plant in Uganda next year as the country seeks to ease power shortage.

 
   -By Nicholas Bariyo, contributing to Dow Jones Newswires; +256 75-262 4615; bariyonic@yahoo.co.uk
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