Frustrated with non-payment of dues, ONGC exits from Sudan

Sudan had since 2011 not paid OVL and partners for oil it bought from the block. Sudan’s dues towards OVL totalled $430.69 million

By   |  Published: 16th Sep 2020  11:00 pm

New Delhi: India’s Oil and Natural Gas Corp (ONGC) has exited from Sudan oilfields after the African nation refused to pay for oil it lifted from the fields.

ONGC Videsh Ltd (OVL), the overseas investment arm of the state-owned firm, as also its Chinese partner CNPC and Malaysia’s Petronas have withdrawn from the block, a top company official said. OVL had a 25 percent stake in Block 2A&4 in Sudan while CNCP had 40 percent and Petronet 30 percent. Sudan’s Sudapet had 5 percent interest.

Sudan had since 2011 not paid OVL and partners for oil it bought from the block. Sudan’s dues towards OVL totalled $430.69 million, the official said. The company initiated arbitration proceedings against the Government of Sudan to recover the dues and has terminated the Exploration and Production Sharing Agreement (EPSA), he said.

OVL had also not been paid about $99 million for the 741-km-long pipeline it built from Khartoum to Port Sudan. The project cost and rental of $254 million was to be paid by Sudan in 18 half-yearly equated installments of $14.135 million each starting from December 30, 2005. The company got a total of 11 installments ($155.48 million) till December 2010 and the balance seven installments amounting to $98.94 million remained outstanding.

The official said falling to get the balance payment even after using diplomatic channels, OVL has initiated a separate arbitration to recover the outstanding dues. OVL had entered Sudan in 2003 by acquiring a 25 percent interest in the Greater Nile Oil Project.

GNOP consisted of the upstream assets of on-land Blocks 1, 2 and 4 spread over 49,500 sq km in the Muglad Basin, located about 780 km South-West of the capital city of Khartoum in Sudan. Upon the secession of South Sudan from Sudan in July 2011, the contract areas of Blocks 1, 2 and 4 which straddle between Sudan and South Sudan were split with a major share of production and reserves are now situated in South Sudan.

Sudan had denied ONGC and partners an extension of licence to operate block 2B after the initial contract expired in November 2016. OVL had, along with state-owned Oil India Ltd, constructed and financed a 741-km multi-product pipeline from Khartoum refinery to Port Sudan for $194 million. OVL’s share of the project cost was 90 percent, while the rest was borne by OIL.