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Home  » Business » OVL to give 5% stake in 2 oil blocks to Sudan

OVL to give 5% stake in 2 oil blocks to Sudan

Source: PTI
January 19, 2004 14:18 IST
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ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corporation, will give Sudan 5 per cent of its stake in two prized oil blocks in the African nation for free, as a quid pro quo for Khartom accommodating it in another producing oil field.

Sudan had asked India's ONGC Videsh to part with 5 per cent of its 26.125 per cent stake in Block 5A and 24.5 per cent interest in Block 5B, which it had bought from Austrian company OMV AG for $136 million, in return for Sudan facilitating OVL's buyout of Talisman Energy of Canada in Greater Nile Oil Project.

"The (Sudan) government forced ONGC Videsh in Block 1/2/4 (also known as GNOP) against the will of a partner in the block. In addition, the government is willing to go ahead and sign a deal with OVL to build a product pipeline and upgrade Port Sudan refinery. In the light of foregoing, we request OVL give us free of charge 5 per cent carried share interest in Blocks 5A and 5B," Sudan's national oil company Sudapet Co Ltd wrote to OVL managing director Atul Chandra.

Sources in OVL said the Sudan government has informed it is a policy to ask for carried share for Sudapet to build and upgrade Sudapet to a real national oil company.

"OVL will give 2.5 per cent stake each in Blocks 5A and 5B to Sudapet for free," they said, adding after the farm-out, the return on investment from Block 5A would be in the range of 11.52-16.15 per cent while from Block 5B it would be between 12.41-17.06 per cent. The rate of return has been calculated based on a oil price of $19 to $22 a barrel.

Sudan had prevailed upon Petronas of Malaysia to withdraw its first right in 260,000 barrels-a-day Greater Nile Oil Project after OVL bought out Talisman's 25 per cent stake for $699 million.

Petronas also waived its pre-emption rights (first right of refusal) in exploration blocks 5A and 5B. In 5A, Petronas has 68.875 per cent stake, while Sudapet has remaining 5 per cent.

In Block 5B, Petronas has 41 per cent stake, while Swedish firm Lundin Petroleum AB has 24.5 and Sudapet 10 per cent.

Post farm-out, OVL's stake in Block 5A will be 23.625 per cent and that in Block 5B would be 22 per cent.

Sources said Sudan had also asked Petronas to give a percentage of the 40.375 per cent stake it bought from Lundin Petroleum AB in Block 51.

"It is learnt that Petronas is now considering giving 5 per cent stake from their acquired interest to Sudapet free of charge on carried interest basis."

"Compared to the Petronas transaction, Sudapet is requesting lesser percentage of interest from OVL. The Government of Sudan has requested 5 per cent interest combined in both Blocks 5A and 5B for Sudapet," they said.

While India is already getting 3 million tonnes of crude oil per annum for its share in GNOP, Block 5A and 5B are estimated to give it an additional 2.5 million tonnes.

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Source: PTI© Copyright 2024 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.
 

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