White Nile has begun ground and seismic survey work on the disputed Block Ba concession in south Sudan, MEES understands. The work is being conducted by Exploration Consultants Ltd (ECL) which carried out a review of the block published in White Nile’s recent statement prior to re-listing on London’s AIM on 23 May (MEES, 30 May). White Nile is understood to be eyeing drilling and early production later this year or early in 2006, but there is no indication of likely production levels yet. The concession White Nile has signed with the government-in-waiting in south Sudan – the SPLA – covers 60% of Block Ba. Under the deal, the Nile Petroleum Corporation (NPC – the state oil company for south Sudan), will take a 50% stake in White Nile. NPC has the option to increase its equity stake in White Nile to 70% if the concession is enlarged to include the remaining 40% of Block Ba.

White Nile’s claim to a legitimate concession in Block Ba is based on the fact that the SPLA granted the rights to all vacant and non-producing blocks to NPC on 12 August 2004. This included Block Ba, since there was no production in the block at the time. However, France’s Total, which has had a concession on the Block since 1980, which was suspended due to the civil war in 1985, claims that its agreement with the government in Khartoum is still valid. It renewed its agreement with Khartoum on 21 December 2004. How the dispute will come to a head is as yet unclear. White Nile is asserting the legitimacy of its claim, but Total is maintaining its claim just as vigorously. An informed source in Khartoum noted that an official government in south Sudan does not yet exist, and will not exist until 9 July at the earliest, casting doubt over the legality of White Nile’s deal. The dispute may also send a negative message to investors about the risks of investing in south Sudan, he says.

White Nile Shares Suspended Again

White Nile’s shares were suspended for the second time on 27 May – just a few days after they were re-listed on 23 May. The London Stock Exchange (LSE) said it had halted trading because of “concerns about the orderliness of the market.” This followed worries that short-sellers in White Nile stock would not be able to cover their positions because of its poor liquidity. Some 99% of White Nile shareholders have provided their irrevocable backing to the Block Ba agreement, which meant shareholders could not sell stock ahead of a meeting to approve the transaction, planned for 16 June. However, White Nile said that it would allow shareholders to sell up to 35% of their holdings to boost liquidity. The company also said it had written to the Financial Services Authority, the UK market regulator, to complain about Simon Cawkwell, the bear raider also known as ‘Evil Knievel’, reported the Financial Times of 30 May. White Nile said Mr Cawkwell should not be allowed to make negative comments about the company in an online diary, while trying to profit from a share price fall. Mr Cawkwell has sold 250,000 shares at a price of 100p and 100,000 at 115p, said the report. White Nile’s shares peaked at 174p on 27 May, and were suspended at 141p, up 15p or 12% on the day. The shares had refloated at 138½p.

Umma Party To Boycott New Government

Meanwhile, Sudan’s Umma party, the largest opposition party, has said that it will not join the new government to be formed in July because there have been no elections. “We are not interested in participating in this new government until there are elections,” said party spokeswoman Mariam al-Mahdi. But she said that the party was “very determined to participate in and are preparing for the next elections.” The Umma party is led by former Prime Minister Sadiq al-Mahdi, Sudan’s last democratically elected leader. Elections are expected within three years of the formation of a new Government of National Unity due to be established on 9 July. The Umma party challenges the creation of the new government because it says it is exclusive to the two parties which negotiated the peace deal – the SPLA and the Khartoum Government. The party said it would participate in the commission now drafting a new constitution for the country, if a national conference was held to legitimise the peace deal, and the two parties to the deal gave up their monopoly over the decision making of the commission. Khartoum and the SPLA rejected the conditions.