Tullow's Aidan Heavey: 'We won't do anything that will upset the government. We work very closely with them'

It says something about the growth of Tullow Oil in the past few years that last week, when it announced a $1.5bn (€1.1bn) deal to buy the remaining 50% share in two huge oil fields in Uganda that it did not already own, its share price hardly moved.

The move to buy Heritage Oil's stake in the two fields near Lake Albert in the east African country gives Tullow 100% ownership of a discovery containing up to 1.5 billion barrels of oil. Tullow's move to buy out the remaining shares followed a bid by Italian oil giant Eni to snap up the Heritage stake in the fields. As part of its joint venture agreement with Heritage, Tullow had the right to make a counterbid for the assets and looks to have landed the prize, much to the annoyance of the Italians.

But Tullow chief executive Aidan Heavey, the accountant who set up the company nearly a quarter of a century ago, won't be celebrating just yet. A couple of hurdles need to be cleared before the purchase is completed. There's still the possibility of another offer being made for the Heritage assets and, more importantly for Tullow, the Ugandan government must also give its blessing.

According to analysts, the time frame in which Heritage investors will vote on the offer works in Tullow's favour. Heritage shareholders vote on 25 January, leaving Eni or any other bidder with little time to swoop in with a higher price.

"It is not completely clear whether Eni, or any other company, can mount a superior bid for Heritage's assets at this stage. The timing would appear tight," energy analysts at Royal Bank of Scotland wrote in a research note to clients. "As a result, the chances appear slim, and we believe that Tullow would have the opportunity to pre-empt any other bid in any case."

The bigger stumbling block looks like being the Ugandans. The government in Kampala has made it clear that it does not want a single company to control the vast discovery. According to newswire reports, the government still favours the Eni bid over Tullow and has threatened to veto last week's announcement

"If they become an obstacle because of their business squabbles and we find that they are not helpful to our industry then we will deny them the licence," the Ugandan energy minister, Hillary Onek, told Reuters.

Heavey acknowledged on a conference call with analysts – before Onek's comments – that the company would comply with the government and was already moving to bring in partners to help develop the field. That process could see Tullow reduce its stake back down to 50%.

"Ugandans want to make sure that they have a number of companies involved in their energy sector, and they don't want one company monopolising the whole lot," Heavey said. "But from our point of view, we have been saying that we would farm down up to 50%. And so our process is basically to bring in companies that fill different skill sets and that can do different jobs and not have a monopoly of the whole basin. We're there in the long haul and we won't do anything that will upset the government. We work very closely with them and the process that we have is a very transparent process and it's open to any companies that the government are happy for us to bring in."

America's ExxonMobil and France's Total are being lined up to come in on the Lake Albert project, according to some reports. Developing the oil fields could cost as much as $5bn, Tullow says.

While the threats from the Uganda government took some of the shine off the Heritage announcement, Tullow was able to provide investors with more positive news from Ghana, where tests on a well off the coast have shown major oil and gas discoveries.

Tullow will be hoping the takeover of the Heritage assets proves as fruitful as previous purchases. Its acquisition of North Sea gas fields from BP in 2001 provided the catalyst for its growth during the past decade. The company says it now accounts for about 70% of British gas production.

But it is in Africa that the company's biggest prospects lie. The BP takeover was followed in 2004 with the purchase of Energy Africa in 2004. It now holds the largest number of exploration licences on the continent, with licences in 14 countries. While Africa is the focus of much of the company's operations, it has snapped up prospects as far away as Pakistan and Bangladesh in Asia, and French Guiana, Guyana and Suriname in South America.

Investors who have stuck with Heavey over the years have seen impressive returns. In the five years to the end of 2009, Tullow shares surged by more than 580% compared with a 52% decline in the benchmark Iseq index in the same period. Adding in dividends over that period, shareholders enjoyed a 620% return over the five years. Over the same period the company's pre-tax profits rose from stg£178.5m (€205m) to almost £300m.

Heavey could hardly have foreseen the vast oil and gas discoveries in Africa when he set up Tullow in 1985 and won a licence to explore for gas in Senegal in West Africa. From its tiny beginnings, he is now battling with CRH for the title of being chief executive of Ireland's biggest company by market value.