Sudanese former rebels in talks on oil field developments

Apr 20, 2005 02:00 AM

The former rebel movement in south Sudan says it is in talks with a number of oil companies, including Western majors, about developing large oil fields that sit under land it controls.
Kostelloe Garang, secretary for international cooperation of the Sudan People's Liberation Movement (SPLM), said rights to several oil blocks in the south had been given to what the SPLM calls its national oil company, the Nile Petroleum, which may now issue oil contracts.
"They are talking to a lot of companies... We are now the darlings of the oil business," Garang told.

Under a comprehensive peace agreement signed by the SPLM and the government in January after more than 20 years of war, the former rebel movement will administer southern Sudan. The SPLM has already signed one deal with small British exploration firm White Nile to develop an area which Khartoum had previously awarded to French oil giant Total.
The Sudanese government says the SPLM does not have the right to award oil contracts. The peace agreement said contracts should be negotiated by a new National Petroleum Commission and revenues from wells in the south should be shared with the north.

However, Garang said the Nile Petroleum Corporation will negotiate independently of Khartoum until the commission, which is aimed at giving the south a direct say in how oil deals are awarded, is established later in the year.
"They will sign deals as long as the commission is not there," he said.
While doubts exist over the legitimacy of White Nile's contract, any deal signed with Khartoum would be in question if the south secedes from Sudan. Under the peace accord, the south has the right to a referendum on secession in six years.

The SPLM recently sent a delegation to China. Garang declined to say if there were meetings with Chinese oil companies but hinted the subject of oil was broached.
"We will discuss oil with anybody who wants to discuss it with us," he said with a smile.
Garang said a delegation would also soon visit India. The national oil companies of both China and India are scouring the globe for oil supplies to feed their booming economies.

The civil war, which caused the deaths of 2 mm people and forced 4 mm to flee their homes, restricted appraisal of oil fields. But analysts estimate there are at least hundreds of millions of barrels of recoverable reserves in the south, while Garang said there were also significant reserves of gold, uranium, iron ore and precious stones.
White Nile development director Andrew Groves estimates its block, renamed "Ba" and part of the block formerly known as "5 Central" that is claimed by Total, has 5 bn barrels of oil in place and recoverable reserves of over 1 bn barrels.
"The block is known worldwide as the 'Superblock'," he said.

Groves predicts that when it gets up and running, production at the block will be between 150,000 and 200,000 bpd and generate $ 100 mm per year in free cash flow. This would represent a significant return for the firm's investors, even allowing for the 50 % stake they will give the Nile Petroleum Corporation in return for a 60 % stake in "Ba". The SPLM retains the remaining 40 % interest.
White Nile expects to spend only $ 30 mm getting the block to the point where production can begin. White Nile said it is finalising documents for distribution to shareholders, which should pave the way for trading to restart.

Garang said he was content with the terms of the deal with White Nile and unperturbed by the controversy surrounding the firm. He said the company had raised south Sudan's profile internationally.
"Without the White Nile nobody would even be talking about south Sudan... People wrote more about White Nile than they wrote about the whole war in the past 20 years," he said.

Source: SudanTribune
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