Buoyed by ONGC Videsh, Reliance, Gail set to join treasure hunt in Sudan

By Anupama Airy & Rohit Bansal, The Financial Express

NEW DELHI, Jan 15, 2004 — ONGC Videsh’s $688-million investment in Sudan’s Greater Nile Project could be the tip of the iceberg. India’s investment story in the insurgency-infested east African nation may see Khartoum becoming New Delhi’s top FDI (foreign direct investment) stop. Indian investment in Sudan may cross $1.74-billion being set aside into Sakhalin in Russia.

Sudanese envoy Abdalmahmood Abdalheem told FE that ONGC brass is burning midnight oil with opposite numbers in his country for equity picks in new exploration blocks 5A, 5B. ONGC is also taking over the task of rejigging the Khartoum Refinery Project and a pipeline connecting this refinery to Port of Sudan all adding up to around $1.4 billion. There’s more. Not just from ONGC, but Indian MNCs like Reliance, which is eyeing picks in oil, textiles, IT and telecom, and Gail India Limited in gas pipelines and city gas.

“ONGC Videsh has just told us of its interest in new exploration blocks bordering Libya and those near Saudi Arabia in the east. When I was on Bombay High recently, back-of-the-envelop calculations showed that ONGC itself would be spending $1.4 billion by 2005, as against $1.7 billion you will spend in Sakhalin by 2005. ONGC Videsh has become really popular with the local community and chairman Atul Chandra has done remarkable work. We see a new silk route between our two countries,” the ambassador said.
India’s party has just started. The ambassador said Reliance chairman Mukesh Ambani met Sudan’s energy and mining minister Awad Ahmed Eljaz in Goa recently. Mr Ambani is now sending a team of key aides to Khartoum on January 21 “to explore investment opportunities not just in oil but textiles, IT and telecom.”

True to its political coziness with New Delhi, Khartoum’s Islamic government is rolling out a red carpet for the Reliance team.

They are being given access to three Cabinet ministers including Mr Eljaz, investment minister Alsharif Ahmed Omar and industry minister Jalal Yusif. Mr Abdalheem said once things progress Mr Ambani may be visiting Khartoum too. When contacted for confirmation, a Reliance spokesperson in Mumbai did not comment.

Ahead of Reliance – and impatient to join ONGC Videsh – is Gail. Chairman Proshanto Banerjee told FE that he is interested in gas equity and gas pipelines, and city gas distribution. He said Mr Eljaz has invited Gail to visit Sudan and the company’s business development team is on its way there.

Sudan also sees its role in bringing Indian and Chinese companies together on its soil. It doesn’t have a joint working group with China. Such a relationship exists only with India. The first meeting to spell the structure of cooperation expected to be held later this month.

Sooner the better. Indian MNCs may have serious competition on their hands. Uncle Sam seems to have woken up to Sudan’s oil reserves. It isn’t just brokering a peace deal with rebel Christian groups based in south Sudan, US President George W Bush recently picked up the phone and invited Sudan president Oman Hassan al-Bashir to sign the deal in the White House. There’s little doubt that Mr Bush is keen to win brownie points at home. But this works quite well for Khartoum after suffering 2-million deaths and 4-million displacements since fighting broke out in 1983 and Washington listed it as a “terrorist state”. It signals developmental assistance and a re-emergence of US and European oil hunters.

Sudan is Africa’s largest country by way of geographical area. It has a relatively small population of 38 million and a per capita GDP (on purchase parity basis) of $1,420 (2002 estimates). Unemployment is over 18.7 per cent.