Total is Largest Stakeholder in Block B, Says Sudanese Presidential Adviser

Total is Largest Stakeholder in Block B, Says Sudanese Presidential Adviser
Thomas Pearmain
798 words
15 June 2007
Global Insight Daily Analysis
English
Copyright 2007, Global Insight Limited. All Rights Reserved.

Global Insight Perspective

Significance Monsour Khalid, a senior adviser to the president of south Sudan’s autonomous government, Salva Kiir, has stated that Total will be the largest stakeholder in the disputed Block B in south Sudan.
Implications White Nile has contradicted Khalid’s claim and has said it will hold a 25% stake in the new consortium.

Outlook Sudanese president Omar Hassan and Kiir are to make the official announcement on which oil companies will be involved in the consortium, but the debacle is not over yet.

In Total Control

French supermajor Total will be the operator and have the largest stake in the disputed Block B in south Sudan, according to an advisor to President Salva Kiir of south Sudan’s autonomous government. Bloomberg reports that Sudan’s National Petroleum Commission has ruled in favour of Total and has validated its contract when it negotiated drilling rights in the 1970s, but the company was forced to leave in the 1980s when the Sudanese civil war began. Monsour Khalid, a senior adviser to Kiir, stated that U.K. independent exploration firm White Nile would not be included in the consortium and that it may receive compensation for the costs it has incurred since it signed its contract.

White Nile Still Claims Interest

However, White Nile was quick to announce a different version of events and stated that it had been advised not only that it would be part of any new consortium formed to prospect for oil in Block B, but also that it would have a 25% stake. White Nile has issued a statement saying that it had been informed by officials of the Government of Southern Sudan (GoSS) that it would keep its oil concession in the country.
Riek Machar, the vice-president of GoSS, is known to have links with White Nile, but it appears that the company does not have the backing of the entire GoSS, which could partly explain reports of Kiir demanding that White Nile shut down its drilling operations at the end of May. White Nile deflected these claims by arguing that its operations in Sudan were halted due to the onset of the rainy season (see Sudan: 7 June 2007: ).

Outlook and Implications

The debacle is set to continue in Sudan, but it seems certain that Total will be the largest stakeholder in any new group as the French oil company received confirmation from the Sudanese government. However, Phillippe Gateau, a spokesman for Total in Paris, told Bloomberg that the company had not had any discussions with White Nile and currently there was no joint venture with White Nile. Dow Jones reported a company spokesman as saying that Total did not wish to partner White Nile.

White Nile announced that the new consortium would include Total (35%), White Nile (25%), the Kuwait Foreign Petroleum Exploration Co. (20%), the national oil company Sudapet, and the GoSS-owned Nilepet, which would both have a 10% stake. If this is the final make-up of the new consortium then it will mean that U.S. mid–major Houston-based Marathon Oil has lost its concession and has been excluded (see Sudan: 8 June 2007: ).It seems, though, that Marathon’s official line is that it “still holds an outside-operated interest in an exploration and production license in Sudan and are investigating the disposition of this interest.” This would be consistent with reports earlier in the year that Marathon was considering divesting its assets in Sudan; the company was looking for buyers of its 32.5% stake in Block B, which it has held since 1980. The company, which has not had employees in the country for years, regards holding an interest in the country as potentially too damaging because of the genocide in Darfur (see Sudan: 19 February 2007: ).

As Global Insight has predicted over the course of the concession debacle, Total’s contract will be honoured, it will have the largest stake in the new block and will also be the operator. What remains uncertain is who else will join Total and this is probably dependent on whether Blocks Ba, Bb, and Bc will be combined into one giant block. It had previously been reported that Total and White Nile would work together in a new consortium, but Total seems reluctant to work alongside the U.K. explorer at the moment (see Sudan: 1 June 2007: ). There will be no official announcement on who holds the oil concession until Sudanese president Omar Hassan al-Bashir and GoSS president Salva Kiir, who both co-chair the National Petroleum Commission, come to a final agreement and, despite the new revelations, it seems the debacle is not quite over yet.