After more than a year of delay, U.K.-based explorer Tullow Oil appears to have finally resolved a politically contentious tax dispute that was holding up its plans to develop of around 1 billion barrels of oil discovered in Uganda .

Tullow should now be able to proceed with the sale of a portion of its Uganda oil licenses to France 's Total and the China National Offshore Oil Company, or Cnooc, which have the size and experience necessary to help Tullow bring the discoveries in the remote Lake Albert region of the landlocked east African country to market.

It's been a struggle to get to this point. After a long run of exploration success spanning several years, things started to go wrong for Tullow about a year ago, after it agreed to buy out its partner in two Ugandan oil licenses, Heritage Oil, for $1.4 billion. Heritage subsequently got into a fight with the Ugandan government over whether it should pay capital gains tax on the sale price. That spat remains unresolved today, with both Heritage and the government laying claim to $283 million of unpaid tax sitting in an escrow account.

Tullow was caught in the middle of this fight and suffered most as a result. Firstly, its deal with Total and Cnooc was put on ice. Then the Ugandan government withdrew two Lake Albert licenses containing significant oil discoveries from the company, which accounted for half the assets they had just bought from Heritage.

Reports that the government was considering selling these licenses on to other companies compounded investors' worries--Tullow had just lost licenses on the side of Lake Albert that lies in Congo in a similar way. Those licenses have now been returned to Tullow.

This is clearly good news for Tullow, whose shares have underperformed recently due to fears that the dispute would unravel its considerable achievements in Uganda . It also shows that the company's approach of marking out a clear public position, and quietly and consistently defending it, can work in a region where many assume the only way to get things done is to pay backhanders to corrupt officials.

It's also good news for Uganda , whose aid-dependent economy badly needs the revenue a domestic oil industry could bring.

However, the devil may be in the detail. Some reports quoting government officials suggest that Tullow has made a big concession to unblock the Ugandan deal--effectively paying off the disputed $283 million of Heritage's capital gains tax itself.

Its not clear that these reports are correct--Tullow officials have repeatedly ruled out paying off Heritage's outstanding tax. The company's investors may find out one way or another on Wednesday, when Tullow announces its 2010 results.

Let's hope for everyone's sake that Tullow has stuck to its principled position. It would set an unfortunate precedent for anyone seeking oil in Uganda , and other previously unexplored parts of Africa , whereby companies who cash in early get the rewards, and those who stick around to see a project through to completion are penalized.

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