India’s OVL to quit Sudan’s block 5B
April 27, 2009 (NEW DELHI) — India’s overseas exploration company ONGC Videsh Ltd (OVL) decided to quit an oil exploration block in Sudan and writ off investments worth $90 million.
The s State-owned oil firm has three blocks in Sudan. OVL had first acquired 25 percent stake in Greater Nile Oil Project in 2003. It also has a 24.1 percent in Block 5A, in which OVL’s production share is 0.27 million metric tonnes. OVL’s third asset is in Block 5B where it holds 23.5 percent with the biggest stake being held by Malaysian oil major Petronas.
OVL is exiting Block 5B which is in the southern part of the Muglad basin in south Sudan and spread across 20,000 sq km. the decision has been motivated by a conflict between the federal and southern Sudan governments, said the Times of India.
The Moldavian Ascom obtained a portion of block 5B, covering more than 20,000 square km, where it begun drilling in January 2008. The other part of the block is operated by the consortium WNPOC (White Nile Petroleum Operating Company) led by Petronas and including India’s ONGC Videsh, Sudan’s state-owned Sudapet and Nilepet and Sweden’s Lundin Petroleum.
The Indian company decided to quit the consortium and to not take part in further exploration work or investing more after the term for first phase of prospecting ends on May 1.
According to The Times of India, the decision was taken after southern Sudan government allowed the Moldovan firm to prospect in the acreage in contravention with a resolution by the National Petroleum Commission. A government source told the Times the situation was similar to Iraq where the federal government and Kurdistan authorities were at variance over say on oil property.
However another Indian newspaper The Telegraph, said OVL decided to relinquish its stake in the block after it realized that its potential was meager compared with the investment. The Moldovan firm had dug three exploratory wells but all turned out dry.
(ST)