KOLKATA (miningweekly.com) – India’s national oil and gas exploration and production major, ONGC Limited, has decided to exit from its oil block investments in Sudan.
The company exited its interest after the Sudanese government’s refusal to settle dues for oil lifted from these blocks, which had risen to about $500-million, and the failure of an arbitration process to arrive at a solution acceptable to both parties.
“The company has reviewed the geopolitical situation in Sudan and has considered the option for exit from the operation of Block 2A, 4 in terms of the agreement. The intention in this regard has been conveyed to the government of Sudan in May 2019,” ONGC Videsh, the overseas investment arm of ONGC Limited said in a financial statement.
“Consequent to this decision ONGC Videsh has provided for an amount of $854-million against the associated oil, gas and other assets in the project,” the ONGC Videsh statement said.
It has been learnt that ONGC Videsh’s other Chinese and Malaysian partners in the projects would also exit the Sudanese assets, as they were not receiving payments for oil lifted by Sudan.
Besides ONGC, the other stakeholders in Block 2A, 4 were China National Petroleum Corporation holding 40% interest in the asset, Petronas Malaysia 30% and Sudapet Sudan 5%. The Sudanese government has been lifting the entire production from these blocks, but the investors had not received any payment since 2011.
Sources said that the joint venture partners had communicated to the Sudanese government seeking termination of the contract by August 31, 2019.
Significantly, related to this, ONGC Videsh earlier this year resumed production from its oil assets in South Sudan, which had remained suspended for over four years in the wake of civil unrest in the country.
It might be noted that ONGC Videsh had in 2003 invested in then-undivided Sudan across contiguous oil blocks, but following the division of Sudan and the formation of independent South Sudan in 2011, the oil blocks were divided between the two countries with the Indian oil company’s operations split across the two nations.