UK White Nile, Moldova firm to drill in South Sudan

Jan 23, 2007 (JUBA) — Two oil companies in south Sudan will begin drilling soon and the autonomous government may sign three more contracts with firms hoping to benefit from a north-south peace deal, officials said.

Bullen Bol, head of south Sudan’s government oil company Nile Petroleum Corporation (Nilepet), said Britain’s White Nile and Moldova’s Ascom Group SA, which had both signed concessions in 2005, would soon complete seismic surveys and begin drilling.

“They are about to complete work on the seismic and will soon start drilling,” he told Reuters in south Sudan’s capital Juba.

Oil, one of the reasons for the north-south civil war which claimed 2 million lives, remains a contentious issue two years after the January 2005 peace deal. Under the deal, contracts should be agreed by the national petroleum commission, which includes north and south Sudanese officials.

French giant Total SA , which had a contract with the northern government prior to the war, disputes White Nile’s contract with the southern government, which allocates part of Total’s block to the British company. White Nile is 50 percent owned by south Sudan’s Nilepet.

Disputes over the composition of the national petroleum commission has delayed its work. Sudan’s two main oil fields are in south Sudan, but the refineries and pipelines are in the north.

White Nile’s block Ba is in Jonglei state. Ascom’s block 5B is north west of White Nile’s block. Both companies signed their contracts in 2005 after the peace accord.

Ascom’s contract may also cause disputes with the northern government over its validity as, according to Khartoum, that block belongs to a consortium led by Malaysian firm Petronas [PETR.UL]. Nilepet owns 5 percent of Ascom’s concession.

THREE OTHERS

South Sudan Vice President Riek Machar had previously told Reuters that three other companies have signed memorandums of understanding (MOUs) with his government which would likely lead to contracts for other concessions in the south’s oil areas.

Machar could not name the Malaysian and Chinese companies who had MOUs, but said the privately owned Spanish H Oil was the third.

United States sanctions imposed on Sudan since 1997 prevent U.S. companies working in Sudan. Many Western companies pulled out during the war and Sudan’s oil industry, which produces around 330,000 barrels per day, is run mostly by Asian companies.

One source in the southern government who declined to be named said that the MOUs meant the companies were assigned specific blocks, and the southern government would decide if they were technically and financially able to explore before signing contracts.

Those contracts would then be referred to the national petroleum commission for final approval. The source said movement was expected on the new contracts “within the coming months”.

Ascom and White Nile are working in swampy areas of south Sudan. Bol said their contracts included provisions that they conduct environmental studies before drilling.

Bol said once oil was found in commercial quantities in Sudan’s south, then decisions on building a refinery and a pipeline to move the crude from the landlocked region would be made.

(Reuters)