White Nile optimistic, South Sudan oil confirmed in 2007
March 6, 2007 (LONDON) –White Nile Ltd. (WNL.LN) is “very optimistic” that the presence of oil will be confirmed in its South Sudan block this year following the start of drilling, Chief Executive Phil Edmonds said Tuesday.
Small U.K. company White Nile is in a dispute with French oil major Total SA (TOT) over the right to drill the 67,000-square-kilometers Block Ba.
Edmonds said that a first well should be drilled next month and two more this year, following the arrival of a Romanian rig through the Kenyan port of Monbasa.
He said that, after extensive seismic work on the block, the company estimates the block could hold 5 billion barrels of oil in place. Edmonds said that 11 prospects have been identified, including one with possibly 1.175 billion barrels in place.
Development director Andrew Groves added three more wells are planned next year, though the program may be upgraded if 2007 drilling goes beyond expectations.
He said that, once its has better visibility on the location of oil reserves, the company would work on the construction of a $1.4 billion oil pipeline. He said the pipeline could be possibly linked to Uganda – where oil is also being developed – and in the direction of Monbasa.
White Nile and Total claims right on the same block. The U.K. company says its contract is valid because it was granted a license by the autonomous government of South Sudan. But Total says it was previously awarded rights to explore in the same location by Sudan’s central government.
Mid-2005, Total made a disclosure application in a London court to request disclosure of documentation on White Nile’s title rights over Block Ba.
But Edmonds said a “case should be in Juba (capital of the autonomous South Sudan), should there be a court case.” He said the information regarding its license had already been disclosed in a May 2005 regulatory document.
Groves said no talks are taking place with the French company and White Nile “wants nothing to do with Total.”
Total said last month it may offer a stake in the project to the South Sudan government. But Groves pointed that, as part of the license deal, Nile Petroleum, a concern owned by the government of South Sudan, received a 50% stake in White Nile.
He said the South Sudan example should be compared to countries such as Venezuela or Russia, where the influence of oil majors such as Total is challenged by state-owned companies.
Groves said White Nile had already started a social program, including the construction of a road and a dyke and a mine-clearance program.
(Dow Jones)