Jul 16 2012
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Sudan Awards New Exploration Deals
Sudan Awards New Exploration Deals
Sudan, still reeling from the loss of nearly 75% of its oil revenues after the secession of South Sudan in July last year, has signed a number of exploration licenses with foreign oil companies for blocks predominantly in the north and east of the country. Contracts were awarded for nine blocks, five of which were offered in Sudanï¿½s latest international bid-round, launched on 15 January. Output from Sudanï¿½s key Heglig oil field meanwhile is fast returning to normal levels following Aprilï¿½s clashes. Nader Itayim reports.
The nine awarded exploration and production (E&P) licenses were for Blocks 8, 9, 10, 11, 14, 15, 18, 19 and C, Director-General of Sudanï¿½s Oil Exploration and Petroleum Administration (OEPA) Azhari 'Abd Allah tells MEES . Of the six blocks offered in Januaryï¿½s bid round, only Block 12B in the troubled Darfur region failed to gain a contract. ï¿½The companies that were awarded [contracts] came from Australia, Brazil, France, Nigeria and China,ï¿½ Mr 'Abd Allah says, confirming the involvement of Australiaï¿½s Statesman Resources and International Petroleum, Nigeriaï¿½s Express Petroleum & Gas, Brazilï¿½s Petra Energia, and Polytec Petroleum Hong Kong in the awards. The French company involved is believed to be Paris-listed Maurel and Prom, according to International Oil Daily . When quizzed, the French company refused to comment.
Of the firms involved, Express Petroleum & Gas is the only company to have previously had assets in the country, holding 10% stakes in Blockï¿½s 13 and 15 in the northeast of Sudan. State-owned Sudapet has also been involved in the deals, holding minority stakes in the awarded licenses, the director-general said.
Source: European Coalition on Oil in Sudan (ECOS), OEPA.
Western involvement in Sudanï¿½s oil sector has been very limited in recent times on account of years of sanctions, which made significant Western investment very difficult. Franceï¿½s Total is the only Western oil company with assets still in Sudan, holding a 32.5% stake in what is now South Sudanï¿½s Block B concession. Yet while it has held the stake for more than 30 years, it has been unable to carry out any exploration or production in the block for the last 27 years due to continued civil war and unrest. Total has been considering a rethink in its policies however, having already held several rounds of discussions with the authorities in South Sudan over a possible return (MEES , 9 April).
Statesman Resources confirmed it had been awarded a 75% working interest in Block 14 with a minimum $12mn exploration commitment over three years. The award is still conditional, Statesman CEO Dougal Ferguson tells MEES , until the signature bonus is paid on execution of the production sharing agreement. This is the first foray into Africa for the company, which has recently turned its attention away from North America to the largely unexplored region. ï¿½A couple of reasons why we targeted that bid round was a lack of competition from US companies [due to sanctions] and also the fact that it is a huge unexplored area with potentially massive reserves. There are two basins within the block that we have,ï¿½ Mr Ferguson says.
A spokesman for Nile Valley Petroleum meanwhile revealed it has signed a farm-in agreement with Petra Energia for Blocks 9 and 11 in central Sudan. ï¿½Nile Valley is already a partner in Sudapak (the joint-venture operating the blocks). Now our share [in Blocks 9 and 11] has decreased from 41% to 5% because there is a new partner which has signed in. We sold a 36% share to Petra Energia,ï¿½ he tells MEES . Nile Valley Petroleum is Cairo-based private equity firm Citadel Capitalï¿½s Sudanese exploration and production arm.
Sudan lost around three-quarters of its total oil output when the South broke away in July last year (MEES , 11 July 2011) leaving the oil-dependent economy desperate for revenues and facing an estimated budget deficit of around $2.4bn, which day-by-day is getting worse. And yet with the economy already under severe strain from years of US sanctions, a weakening currency and double-digit hyperinflation, the government announced a raft of stringent austerity measures which included, among others, plans to raise taxes on consumer goods and reduce fuel subsidies. The subsequent increase in the price of fuel has sparked anti-austerity demonstrations across the country over the past three weeks, with the majority of people calling for the governmentï¿½s resignation.
Fierce fighting along the border earlier this year resulted in considerable structural damage, leading to a complete shutdown of production at the strategic Heglig oil field, which was producing nearly half of Sudanï¿½s post-independence 110,000-115,000 b/d output (MEES , 30 April). Nearly three months on, Heglig is now fully operational, and is producing at around 52,000 b/d on average, Mr 'Abd Allah said. He added that Sudan is currently producing around 110,000 b/d in total.
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