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Decade long payment default finally pushes ONGC out of Sudanese oilfield
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SME Times News Bureau | 18 Sep, 2020
After facing years of payment
default, the country's largest oil and gas explorer Oil and Natural Gas
Corporation has finally exited from Sudanese oilfields, relieving itself
of yet another toxic overseas asset.
Company sources said that
all the three overseas investors in the Sudanese oilfield including ONGC
Videsh Ltd (OVL), the overseas investment arm of the state-owned firm,
Chinese entity CNPC and Malaysia's Petronas have now withdrawn from the
block.
The OVL had a 25 per cent stake in Block 2A&4 in Sudan
while CNCP had 40 per cent and Petronas 30 per cent. Sudan's Sudapet
had 5 per cent interest.
The OVL has been operating the block of
Greater Nile Oil Project in Sudan along with partners CNPC and Petronas
since 2003. But, Sudan has not paid all the partners for the oil bought
since 2011 that had built up millions of dollars of dues with OVLs share
itself coming to over $ 400 million.
Not only the payment for the oil, OVL has also not been paid for the pipeline it built connecting the oilfield to Port Sudan.
Sources
said with diplomatic channels also being exhausted to resolve the
issue, OVL has now initiated arbitration proceedings against the
Sudanese government and has exited from the exploration and production
agreement for the oilfield.
OVL had in 2003 bought 25 per cent
stake in the Greater Nile Oil Project (GNOP) comprising Block 1, 2 and 4
in the undivided Sudan. It lies in the prolific Muglad basin, about 780
kms in the South-West of Khartoum, the capital of Sudan. The project
produces about 50,000 barrels of oil per day.
Upon secession of
South Sudan from Sudan in July 2011, the contract areas of blocks 1, 2
and 4, spread over both areas, were split with a major share of
production and reserves now situated in South Sudan.
Blocks 2A, 2B and 4N are in Sudan, and blocks 1A, 1B as well as 4S are in South Sudan.
Block 2B produces 28,000 bpd of oil while Block 4 is in the exploration phase.
Sudan
has not paid OVL for the oil from GNOP it consumed. Post secession, as
the Sudanese government's share of the total production in Sudan was not
sufficient to meet the requirements of the local refineries, foreign
firms were asked to sell their share of crude oil to it.
However, the payment on account of crude oil purchased by the Sudanese government has not been received.
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