Sudan won't extend ONGC's licence to operate oil block

NEW DELHI: Sudan has denied India's Oil and Natural Gas Corporation an extension of licence to operate an oil block after the initial contract expired in November 2016.

ONGC Videsh^[2], the overseas arm of the state-run firm, had a 25 per cent interest in the 2B block of Sudan and its share in the block's output was 7,000-8,000 barrels a day. China National Petroleum Corporation and Malaysia's Petronas^[3] are the other partners in the block.

The process of surrendering the block is underway after the Sudan government gave a notice to that effect, a senior ONGC^[4] executive said. The notice to surrender came after months of negotiations between the companies and the government yielded no result. ONGC and partners were seeking a licence renewal for 15 years but couldn't agree to the demands of the Sudanese government.

"It was not economical to commit to work programme or investment Sudan was demanding," the executive said, requesting not to be identified. The previous 20-year contract that expired last year provided for a five-year extension without any alteration in terms but Sudan didn't agree to that during negotiations, the executive said.

The state oil companies of Sudan will now operate the 2B block. ONGC has stakes in two more producing blocks in Sudan, where the licence to operate will run till 2021-22. ONGC's share in output from these blocks is 6,000-7,000 barrels per day. Sudan owes a few hundred million dollars to ONGC, including $100 million for the oil pipeline the Indian company built in the country and its share of the produce from the 2B block. In 2003, ONGC had purchased stake in the Greater Nile Oil Project comprising block 1, 2 and 4 in Sudan. After South Sudan was carved out of Sudan in 2011, the reserves were split between the two countries. All the blocks of South Sudan in which ONGC has stakes have been shut for about three years due to security issues.

South Sudan has been seeking India's help in reviving production at those blocks and is willing to compensate ONGC for the period the fields have not operated. South Sudan is also keen on quickly extending the licences to operate these blocks for another five years, most of which will expire in the next five years or so.

^[1][5]

References

1. ^{^} Oil and Natural Gas Corporation (economictimes.indiatimes.com)
2. ^{^} ONGC Videsh (timesofindia.indiatimes.com)
3. ^{^} Petronas (timesofindia.indiatimes.com)
4. ^{^} ONGC (economictimes.indiatimes.com)
5. ^{^} South Sudan (timesofindia.indiatimes.com)