India to exit oilfields in Sudan

KOLKATA (miningweekly.com) – India will pull out of developing oilfields in Sudan, after rejecting new terms and conditions laid down by the African nation.

Sudan is demanding higher royalties and taxes before renewing the exploration and production licence of Block 2B, against a backdrop of falling international oil and gas prices and strains on the national exchequer.

However, ONGC Videsh, the overseas arm of India’s ONGC, has rejected the proposal and has decided not to seek a renewal of the licence, which expired in November.

ONGC held a 25% stake in Block 2B, with the balance held by China National Petroleum Corporation and Petronas of Malaysia.

While it could not be confirmed officially, sources say that ONGC’s partners have also rejected the Sudanese government’s tax and royalty hike proposal and that they too have decided to surrender the assets.

It has been reported that the government of Sudan has already initiated preliminary talks with other international exploration and production majors, including Total of France and Tullow Oil of the UK, as a replacement for the incumbent operators for Block 2B.

Significantly, the imminent exit from Block 2B will mark ONGC Videsh’s shuttering of all its operations in the region having already junked its assets in South Sudan.

The Block 2B assets are contiguous with oil- and gasfields in undivided Sudan as part of Greater Nile Oil Project comprising Blocks 1, 2 and 4, which was awarded to ONGC and partners in 2003. Subsequently, on the partition of Sudan, Blocks 2A, 2B and 4N fell under Sudan while 1, 2 and 4 went to South Sudan.

In Sudan, ONGC and its partners were producing an average of 28 000 bbl/d of oil while Block 4 was under exploration.

Meanwhile, at least two Indian officials said that ONGC’s assets in South Sudan had been virtually discarded as talks between the two countries on issues ranging from compensation payable by the South Sudan government to an assured security detail for ONGC Videsh officials failed to make any progress.

The officials said that, at the time that operations were suspended in South Sudan in December 2013, all ONGC personnel involved were evacuated in phases and the assets were closed down in response to rapidly spreading violence across the country.

Talks to revive operations have not made any headway as neither the Indian government, nor the operator, were satisfied with security protocol and compensation for the period that the fields were not operational, the officials added.