Sudan talks to Chinese firms for help in Darfur oil exploration

July 8, 2008 (LONDON) — State-linked Chinese oil services companies are in talks to help Sudan exploit its crude reserves in its troubled Darfur region with the Sudanese army providing security, a company official confirmed Tuesday.

“Preparations are ongoing to launch a small campaign of 1,000 kilometers of seismic” works at Block 12A in Northern Darfur, Sudan’s country manager at Ansan Wikfs, a partner of Sudan-owned Sudapet, Denis Rey told the Dow Jones.

Based in Cayman Islands, Ansan Wikfs Investments Limited was formed in 1991. The company has operations in Yemen and Sudan. Ansan is an independent oil and mineral resources holding company engaged in the acquisition, exploration, development and operation of petroleum and mineral properties.

The area to prospect is half the size of the Philippines. This would be the first exploration move deep into the region since conflict erupted in 2003.

Seismic work sends vibrations to the ground in order to locate oil and gas reserves. Commercial crude production starts several years after any promising finds.

In an e-mail to Dow Jones Newswires, Ansan Wikfs’ Rey said the partners in Block 12A had considered using BGP, the geophysical services unit of state-owned China National Petroleum Corp. CNPC, which controls New-York-listed PetroChina Co. Ltd. (PTR).

PetroChina has already come under fire from U.S. campaigners for its parent company’s investments in Sudan.

However, timing issues meant the partners are also in talks with Zhongyuan Petroleum Exploration Bureau, owned by China’s state-run Sinopec (SNP), Asia’s largest oil refining and petrochemical enterprise, which is “ready to import (vibratory equipment) to Sudan for this contract,” Rey added.

Sudan is one of Africa’s largest oil producers with output of 500,000 barrels a day. More than 200,000 barrels a day are imported by China, making Sudan its fourth-largest provider of crude.

Given “the vulnerable condition of civilians in Darfur as the conflict there continues,” the beginning of seismic work on the block would warrant “serious scrutiny and concern,” said Nina McMurry, an advocacy analyst at the Washington-based Sudan Divestment Task Force.

The Task Force, part of the Genocide Intervention Network, is campaigning for investors to sell shares in companies deemed complicit in what some say is genocide in Darfur.

Ansan Wikfs’ Rey said a memorandum of understanding was signed in the first quarter of this year between the Darfur block operators and South Africa’s PetroSA, which holds neighboring acreage, to swap seismic contracts and support and to share information.

Sudapet, Ansan and Saudi Arabia’s Al-Qahtani Group are the joint-operators of Block 12A, Rey said.

Smaller shareholders include Hi-Tech Petroleum Group, a venture partly-owned by Ali Al-Bashir, brother of Sudanese president Omar Al-Bashir; and Libyan-controlled All Africa Investment Corp. The other shareholders as well as ZPEB and PetroSA didn’t return requests for comment. All Africa Investment couldn’t be reached for comment.

Rey added the Darfur block partners had an option to use CNPC’s geophysical unit as it is already doing seismic work in the South African-controlled block.

Other people involved in the Darfur block confirmed BGP had looked into working in Block 12A and had asked for an assessment of security conditions there.

“As to my knowledge, I don’t think BGP has a MOU with Sudapet on the seismic survey in Block 12A,” Han Shaoguo, senior vice-president of BGP International, said.

ARMY TO PROTECT EXPLORATION AREA

Sudan’s government demands “that the Sudanese army be deployed and in control of the area to be prospected before operations start,” Rey said in an e-mail response to questions.

A border station called Karab Al Tom, located between Block 12A and PetroSA’s acreage, “is now under (Khartoum’s) military control,” he added. “We are awaiting progress reports about the situation more in the south of Block 12A before awarding contracts and make (sic) progress on this campaign.”

Seismic surveys will only begin once the army has “provided security passages in the area,” an unnamed person with knowledge of the oil exploration plans confirmed.

Sudan’s Oil Minister Zubair Ahmed al-Hassan told Dow Jones Newswires in April that members of the consortium “are not operating up until now because (they) are afraid… of the image in the media saying things are terrible in Darfur.”

(ST)