Tullow Oil Uganda CREATING SHARED PROSPERITY IN UGANDA Muhumuza Didas – Senior Social Performance Advisor

September 19th 2014

Oil & Gas Development in Uganda

Agenda

Tullow overview

Oil and gas value chain

Opportunities for Ugandans

Shared challenges

Shared responsibility and prosperity

Slide 2

Slide 3

2004 Tullow entry into Uganda

84% Exploration success

rate

64 # of wells drilled to date

1.7 bn Barrels of recoverable oil

resources

$2bn Invested in Uganda to date

550 No. of local service providers since

2008

$200m Spent with Ugandan Service providers

between 2008 -2012

30 Ugandan trainees abroad

62 Ugandans on Tullow funded

trainings and scholarships (USD 60,000 @)

150,000 Jobs to be created

88% Ugandan employees

$12-15bn estimated investment required

3 partners

Tullow Uganda by Numbers …

Progress to date and Project Completion Outlook

Exploration & Appraisal Phase completed

Discoveries: 3.2billion barrels in reserves, of which 1.7 billion are recoverable

Now entered the Development Phase, approx. 5 years:

First 2 years: Production Licenses, Front End Engineering Design studies, Costing, Land Access Programme, IFC-PS compliant ESIA, NEMA approvals, Logistics and Infrastructure Planning, National Content Capacity Building, Financial Planning, Final Investment Decision

Then approx. 3 years Execution Procurement and Construction Contract

Approx. 5 years to First Oil with a 20-year Production Phase

Potential net value for government of approximately US$50bn over 20 years

4

Slide 5

& Exploration

Appraisal

Field operations

Field abandonment

Pre-project Project

production profile

Time

Discovery End of production

Restored Site

“First Oil”

Development Studies

Preliminary

Conceptual

Prospect

Field Development

Exploration to Production: A Long Term Process

Slide 6

With the Signing of the Commercial Framework MOU, the route to Market for the Lake Albert Resources is now clear

Sales into the international Crude Oil Market

Sales into the Local Oil Product Market

Sales into the Local Power Market

Flow of Revenue from the Market

UPSTREAM DEVELOPMENT

REFINERY

EXPORT PIPELINE

EXPORT TERMINAL

LOCAL MARKET

POWER GENERATION

UPSTREAM USD8-12 bln

30- 60Kobd USD2-3 bln

USD3-4 bln

Slide 7

Development Studies : A Multi Disciplinary Activity

Slide 8

Project execution – Getting to First Oil

Slide 9

Buliisa Area

75% of resources

175,000 bpd process plant South of Nile

Kaiso Tonya Area

10% of resources

10,000 - 20,000 bpd process plant below the

escarpment

Kingfisher Area

15% of resources

45,000 bpd process plant at Kingfisher

No offshore facilities (sub-lake extended reach wells)

Integrated Basin Wide Development Plan

executed by the 3 Operators

Optimises sharing of facilities, project costs

and accommodates future Lake Albert

exploration success

Maintains environmental bio-diversity and

integrity, promotes corporate social

responsibility, contains national

content strategy

Lake Albert development concepts

Slide 10

• Due to the waxy oil properties of the crude and the environment crossed by the pipeline (Rift, mountains, rivers), the pipeline design is complex and requires heating . It has to be well matched to the oil properties and the environment to allow safe and reliable crude transport, 1,200-1,400km to the Indian Ocean, across two countries

•Lake Albert Partners started pipeline concept studies in 2012 and pre‐feed studies in 2013.

•Numerous agreements involving Governments, crude shippers and shareholders are required to launch such a project. The upstream development and the oil export pipeline will require a coordinated Final Investment Decision (FID)

Challenges of the Lake Albert Development

Land access

Basin-wide ESIA

IFC Performance Standards Compliance

Road infrastructure

National Content in Jobs and Contracts

Project Economics

Project Timelines

11

Challenges of the Lake Albert Development

Industrial Base Line

Survey in Uganda

12

Oil Industry Needs

Supply and Demand Study

World Bank

French Embassy

Chinese Embassy

UN

Almost 100 meetings and interviews have been done

Companies visited/ interviewed

Education

Partners

Transportation (Goods) – 4

Transportation (People) – 1

Generic waste management – 2

Manpower agency – 2

Civil construction services – 2

Cement manufacturing – 2

Hazardous waste management – 1

Technical consultancy – 2

Facility management – 3

Construction steel – 3

Mechanical construction – 2

Catering – 1

Certification – 3

Bulky material – 1

Domestic airline – 1

Retail – 1

PPE – 2

Road construction – 1

Food supply – 1

Security – 1

Light iron/ steel products – 5

Light equipment – 1

Fuel wholesale – 2

Banks – 2

Other sectors - 2

CNOOC

C&P, Engineering specialists

TOTAL

LADPG, GAPI, C&P Uganda, Legal, Logistics, CSR, Downstream, E&P Training TDR, Total Consulting

TULLOW

Operations, Training manager, Engineering specialists, C&P Uganda

Universities

Makerere University

Kyambogo University

Technical Institutes

Nakawa Vocational Institute

UPIK*

Government - Education

BTVET (and UGAPRIVI)

MOES

DIT

NCHE

NCDC

UIPE

Associations

PSFU - 2

AUOGS - 6

UMA - 2

USSIA - 1

UNABCEC - 1

FUE - 1

Ugandan Insurers Association - 1

International organization

PEPD

UBOS

UIA

Governmental bodies

Supply survey results

~200 filled questionnaires returned

Source: *Meeting held in Kampala with UPIK’s management 13

MAPPING OF SELECTED INDUSTRIES ON BENEFITS-FEASIBILITY MATRIX

Industries related to oil & gas projects in Uganda have been classified in terms of potential for local content development

Green and Yellow areas are opportunities for Ugandan suppliers and insurers

14 Source: SBC analysis

Note: Industries within quadrants are not evaluated relatively to each other

Feasibility

Cement

manufacturing

Bulky

construction

materials

Construction

steel

manufacturing

Site safety

and security

Facility

Management

Civil construction

services

Generic waste

management

Hazardous waste

management

Transportation &

Logistics (Goods)

Fuel

wholesale

Manpower

agency

Technical

consultancy

Food

supply

Catering

Light equipment

manufacturing

Domestic Airline

Services

Road

construction

Transportation

(People)

Work safety

products

High

Low

Complex Easy

Production

operation services

Furniture

manufacturing

Vendor and

representation

services

Mechanical

construction

services

GMS Light iron/steel

products Oil/Water

pipe

installation

Pipe

steel

Petrochemical

(refinery)

Fertilizer

Machinery and

heavy equipment

manufacturing

Drilling

services

Drilling

supplies

Oilfield

Services

Oilfield equipment

manufacturing

Drilling

Equipment

Oilfield

chemicals

Cement

additives

O&G specific

emergency

services

Engineering

consultancy

Benefits

Blue area

industries

will be

addressed

through

steps on

education

Host: 7766927#

Cumulative number of people required to build and operate LA projects on site. Operations of this scale represent opportunities for local insurers

MANPOWER SPLIT BY DEVELOPMENT PHASE

Manpower required to develop and operate LA projects ranges from almost 13,000 workers at peak to 3,000 people in operations

Source: SBC analysis; CNOOC; Total; Tullow 15

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

202820152014 2026 20302029202720172016 2021 202220182013 20252019 2023 20242020

Construction (infield facilities)

Drilling

Production Operations

Refinery - operations

Refinery - construction

Transportation (from outside of LA)

Export pipe

CONCEPTS OF DIRECT, INDIRECT AND INDUCED JOBS GENERATED BY OIL & GAS PROJECTS, REGARDLESS OF THE NATIONALITY OF THE PEOPLE

Total new jobs generated in Uganda by LA oil development projects may be in the range of 100,000 to 150,000

16

Source: SBC research on “stand alone” oil and gas cities (Stavanger - Norway, Aberdeen - UK, Macaé – Brazil, Trinidad & Tobago)Note: *Number of jobs created was computed as peak of manpower (13,000) for LA projects. ±15% was added to

account for uncertainty**Ratio direct to indirect varies in the range of 2.3 - 3.8 depending on geography***Ratio direct to induced varies in the range of 6.6 - 8.4 depending on geography

100,000

x2.3** 35,000

x6.6***

Total new jobs

150,000

InducedIndirectDirect*

15,000

11,000

INDUCED

INDIRECT

DIRECT70,000

105,000

25,000

ESTIMATE

~

~

~

~

~

~

Min / Max

The survey reveals a substantial gap of supply over future projects’ demand for transport & logistics of goods

INDUSTRY SUPPLY & DEMAND ANALYSIS

Trucks for bulky material capacity – 15m3

Trailer for equipment capacity – 20 tons

Truck for food – 20 tons

Rotation time – 15 days (for export pipe construction – 7 days)

O&G Producers Land transportation safety recommended practice: n° 365, revision 1.1+Guidance Note 6

At least ISO 9001

QUALITY ASSUMPTIONS ON DEMAND

Most trucks not in line with Oil & Gas standards

Around only 200 trucks (~7% of total fleet) in line with Oil & Gas standards

DEMAND SUPPLY

Extract for illustration: Transportation & Logistics (Goods)

17

Demand & supply of trucks *

# of trucks per month

0

1,000

2,000

3,000

4,000

5,000

202920272025202320212019201720152013 2018 20222016 20202014 2026 20282024

Karuma Dam Incremental Demand*

LA Projects Incremental Demand

Gap: 80+%

Range of today’s supply (+/- 10% )

Gap: 660%***

Oil & Gas industry compliant trucks

Oil & Gas Industry Compliant Supply

Some of Local Content high-potential industries have a high probability to be imported if no actions is taken

QUALITY-QUANTITY GAP MATRIX

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Source: SBC analysisNote: Industries within quadrants are not evaluated relatively to each other

*Consultancy for land and boundary surveying activities, hydrologic surveying activities, projects involving civil engineering, hydraulic engineering, traffic engineering, water management projects, etc.

Note: Detailed

definition of each

industry is provided in

the Appendix

Hazardous waste management

Light equipment manufacturing

Work safety

products

Production

operation services

Bulk

construction

materials

Reinforcement steel

manufacturing

Security

Fuel

wholesale

Domestic Airline

Services

Light iron/steel

products

Transportation

(People)

Mechanical

construction services

Civil construction

services

Transportation &

Logistics (Goods)

Cement

manufacturing

Generic waste

management

Catering

Facility

Management

Technical

consultancy*

Food

supply

Road

construction

Furniture

manufacturing

Vendor and

representation

services**

GMS

Manpower

agency

Local manufacturing

High probability of import

Quality

Gap

Quantity

Gap

Far below

standards

Meeting

standards

<10%Future Gap

>100% of current supply

Approaching

standards

10%-100%

• Unlocking these resources requires huge investments

• Key opportunities for local and foreign suppliers to partner

• This Project can transform the Uganda economy forever by contributing to its development into a middle income country

• LA development has several major challenges to address

• Timing is critical to maintaining Uganda’s first mover advantage

• Tullow + JV Partners investing in the long-term development of the oil industry in Uganda.

• In doing so we Create Shared Prosperity for our business and for Uganda

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In Summary ..

Thank You, Q and A

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