Sudanese White Nile deal is in doubt – Total
By Richard Orange, The Business
PARIS, May 1, 2005 — French oil group Total claims it has convinced people close to Southern Sudan’s leader John Garang that the deal White Nile signed last Monday should be overturned. Aim-listed company White Nile claims its agreement is with the South Sudanese national oil company.
A Total spokesman said: “We are talking to people who are near John Garang, trying to approach him and insist that we have a legally valid title. Certainly some people around John Garang acknowledge this.”
Total denies that White Nile’s deal, which would give it rights to the huge exploration block Ba in southern Sudan, has the sanction of the South Sudanese government.
The spokesman said: “They’ve got a deal with Costello Garang [Southern Sudan’s informal foreign minister]. There isn’t a South Sudanese government. Even if they bring the contract to the London Stock Exchange to be able to resume trading, what’s the legality of a deal that has been signed by an entity that doesn’t exist?”
On Wednesday, White Nile announced that it had finalised a licensing agreement with the Nile Petroleum Corporation under which it would take a 60% stake in exploration Block Ba, in exchange for the South Sudanese taking a stake in White Nile.
The block overlaps an exploration area awarded to Total by Sudan’s northern Khartoum government in 1980. The two sides in January signed a peace agreement ending 21 years of bloody civil war.
White Nile earlier this month moved to reassure investors by flying over Costello Garang, who has long managed foreign affairs for the southern Sudanese, to explain the rationale of the deal.
White Nile, led by former England test cricketer Phil Edmonds and South African mining entrepreneur Andrew Groves, has been suspended from the London Stock Exchange since February 16, after its shares leapt more than 1,000% in three days after listing.
Last Wednesday, it announced it was near finalising its circular to shareholders ahead of re-listing within two to three weeks. The company failed to return calls requesting a reaction to Total’s allegations.
Better than expected results from BP and Royal Dutch/Shell last week mean most expect Total to post first-quarter net profits at the top end of the E2.5bn ($3.3bn, £1.7bn) to E2.9bn range of analysts’ predictions when it reports on Wednesday. This beats the E2.5bn record it achieved in the past three months of last year, and is well clear of its E1.9bn profits in the first quarter.
Merrill Lynch expects oil and gas production to fall 2% on the same period last year to 2.6m barrels of oil equivalent per day. Total has lost production due to work carried out at its Sincor heavy oil scheme in Venezuela, from continuing damage from last year’s Hurricane Ivan in the US Gulf of Mexico, and due to contracts that cut the number of barrels it is entitled to when the oil price is high.
Angus McPhail at ING in Edinburgh said: “It won’t be particularly strong in terms of volumes, but we think there’s a potential for a surprise in the refining and marketing business.”