INTERVIEW-Sudanese former rebels say in talks on oil fields

By Tom Bergin, European Oil and Gas Correspondent

LONDON, April 20 (Reuters) – The former rebel movement in south Sudan says it is in talks with a number of oil companies, including Western majors, about developing large oil fields that sit under land it controls.

Kostelloe Garang, secretary for international cooperation of the Sudan People’s Liberation Movement (SPLM), said rights to several oil blocks in the south had been given to what the SPLM calls its national oil company, the Nile Petroleum Corporation, which may now issue oil contracts.

“They are talking to a lot of companies…We are now the darlings of the oil business,” Garang told Reuters in an interview late on Tuesday.

Under a comprehensive peace agreement signed by the SPLM and the government in January after more than 20 years of war, the former rebel movement will administer southern Sudan.

The SPLM has already signed one deal with small British exploration firm White Nile Ltd. to develop an area which Khartoum had previously awarded to French oil giant Total.

The Sudanese government says the SPLM does not have the right to award oil contracts. The peace agreement said contracts should be negotiated by a new National Petroleum Commission and revenues from wells in the south should be shared with the north.

However, Garang said the Nile Petroleum Corporation will negotiate independently of Khartoum until the commission, which is aimed at giving the south a direct say in how oil deals are awarded, is established later in the year.

“They will sign deals as long as the commission is not there,” he said.

While doubts exist over the legitimacy of White Nile’s contract, any deal signed with Khartoum would be in question if the south secedes from Sudan. Under the peace accord, the south has the right to a referendum on secession in six years.

The SPLM recently sent a delegation to China. Garang declined to say if there were meetings with Chinese oil companies but hinted the subject of oil was broached.

“We will discuss oil with anybody who wants to discuss it with us,” he said with a smile.

Garang said a delegation would also soon visit India. The national oil companies of both China and India are scouring the globe for oil supplies to feed their booming economies.

SIGNIFICANT RESERVES

The civil war, which caused the deaths of 2 million people and forced 4 million to flee their homes, restricted appraisal of oil fields.

But analysts estimate there are at least hundreds of millions of barrels of recoverable reserves in the south, while Garang said there were also significant reserves of gold, uranium, iron ore and precious stones.

White Nile development director Andrew Groves estimates its block, renamed “Ba” and part of the block formerly known as “5 Central” that is claimed by Total, has 5 billion barrels of oil in place and recoverable reserves of over 1 billion barrels.

“The block is known worldwide as the ‘Superblock’,” he said.

Groves predicts that when it gets up and running, production at the block will be between 150,000 and 200,000 barrels per day and generate $100 million per year in free cash flow.

This would represent a significant return for the firm’s investors, even allowing for the 50 percent stake they will give the Nile Petroleum Corporation in return for a 60 percent stake in “Ba”. The SPLM retains the remaining 40 percent interest.

White Nile expects to spend only $30 million getting the block to the point where production can begin.

Rumours of the deal sent the company’s shares soaring almost 1,400 percent on the London Stock Exchange’s junior AIM market, although trading was subsequently suspended as the exchange was unhappy that the firm had not been more open in disclosing details of the deal.

White Nile said it is finalising documents for distribution to shareholders, which should pave the way for trading to restart.

Garang said he was content with the terms of the deal with White Nile and unperturbed by the controversy surrounding the firm. He said the company had raised south Sudan’s profile internationally.

“Without the White Nile nobody would even be talking about south Sudan … People wrote more about White Nile than they wrote about the whole war in the past 20 years,” he said.