Emirate Mubadala leads race for Total Sudan oil project
April 23, 2008 (LONDON) — Mubadala Development Company is the lead bidder for a stake in Total SA’s (TOT) South Sudan block, with a decision due by the end of the month, the country oil minister said in an interview this week.
The sale of an interest in the Total block could herald the resumption of exploration in one of the African country’s largest acreage.
Speaking to Dow Jones Newswires, Zubair Ahmed al-Hassan said Mubadala is “the strongest” candidate to enter Block B, and a deal is expected before the end of this month.
Mubadala Development Company is a wholly owned investment vehicle of the Government of the Emirate of Abu Dhabi, in the United Arab Emirates.
The acreage, which is the size of Greece and thought to contain large reserves of oil, is operated by French oil giant Total.
The oil minister said China National Petroleum Corp. and Sinopec (SHI), two Chinese-owned companies already operating in Sudan, have also submitted bids. Sinopec and CNPC had no immediate comment, while Mubadala couldn’t be reached.
The oil minister said Tri-Ocean Energy, controlled by Kuwait’s al-Kharafi family, has also inquired about the stake.
Total stopped operating in Sudan in 1985 after a civil war erupted between the central government and southern separatists. Last year, Total indicated it would resume activities following a 2005 peace accord and after Sudan upheld its license on the block.
A tiny U.K. upstart, White Nile Ltd. (WNL.LN), claimed rights on a large part of the block in 2005. But the minister said “it’s over (for White Nile), they now have withdrawn from the block.”
A Sudanese committee “now evaluates what work they have done until now…for compensation” in cash but not for a stake in the field. White Nile didn’t return a request for comment.
Total E&P Sudan Project Coordinator Coordinator, Olivier Michel, told Sudan Tribune last March that TOTAL has successfully returned to South Sudan and intends to resume activities soon. “We will be in Jonglei and the community has to know this.” He further affirmed that TOTAL is minding its business.
The minister said Total returned to the block this year, but a divestment of Marathon Oil Corp.’s (MRO) stake in the block and the entry of new shareholders is one of the conditions set by Total to restart exploration.
Marathon, unable to keep its 32.5% interest in the block because Sudan is under U.S. sanctions, sold the stake to Total in March. The share adds to the 32.5% already owned by the French giant.
A Total spokesman said Wednesday the ownership of the Marathon shares was temporary and it intends to sell them to a new foreign entrant as well as to a South Sudan concern.
According to a new agreement reached last year, Total has operating rights for the block with a 32.5 percent stake, as it was the case in the initial deal, Kuwaiti Kufpec Sudan Ltd 27.5 percent instead of 25% and state-owned Sudapet maintains its 10 percent, the southern Sudan government owned Nilepet 10%. The remaining 20% should be offered in a public bid.
Last March, Sudanese First Vice-President and the President of southern Sudan Salva Kiir Mayadrit visited Abu Dhabi where the participation of Mubadala in the capital of Block B was on the top agenda of the talks.
In its annual report, Total warns due to a law passed last year in Congress, U.S. funds may have to sell their shares if it restarts exploring in Sudan. That “could have an adverse effect on Total’s share price,” it said.
The Total spokesman said it remained in contact with U.S. funds, explaining in particular its standards of operations.
(ST)