Total disburses $1.5 mln annually to maintain Sudan’s oil rights
Oct 3, 2006 (LONDON) — French oil company Total SA (TOT) is paying $1.5 million a year to the government of Sudan for the right to keep its non-producing Block B in the south of the country, London-based political and economic consultant on Africa Gary Busch said Friday.
Busch, who has just returned from Sudan as a consultant for Total, said the company’s move is justified in the face of intense competition in Sudan from oil companies from China, Malaysia, India, Kuwait and the United Arab Emirates, as well as the general chaotic political situation in the country.
Total spokeswoman Patricia Marie confirmed the company is paying the Sudanese government but wouldn’t disclose how much. She added that the government had guaranteed the money would be spent on social programs benefiting the people of southern Sudan, including scholarships to students.
"Since we are not producing oil in Block B, we have to renew our contract with the government on an annual basis.
"To maintain our rights to the block we have to pay," Marie said.
"Sudan’s oil production and revenues are rising on the basis of eastern investment," Busch said, pointing out that direct foreign investment in Sudan has increased to $2.3 billion this year from $128 million in 2000.
"Total thinks it must stay put despite the cost."
Busch said Sudan, which began to export crude oil in 1999, is now producing 512,000 barrels a day. He said Petronas Sudan, a unit of the Malaysian national oil company Petroliam Nasional Bhd., is one of the biggest stakeholders in Sudanese oil, holding equity in several blocks, including the Muglad basin area that accounts for most of Sudan’s current oil production.
Total suspended exploration activities in Sudan from 1985 to 2004 because the area where Block B is located was no longer secure. That is not the only reason.
Total is also locked in a dispute with White Nile Ltd. (WNL.LN), a U.K.-based oil firm, which has been awarded control of an oil concession by the Sudanese People’s Liberation Movement, a former southern rebel group which now shares power in the capital, Khartoum, and which has a stake in the block. The dispute has yet to be resolved as White Nile had to submit documents to Total relating to their deal.
Total argued in a London court that this concession overlaps a substantial part of its Block B, which is precisely the area covered by its updated agreement with the government and where the group is planning to resume operations.
But in an interview with Reuters last month, White Nile’s Chief Operating Officer Philip Ward said his company will drill three wells in Sudan’s south next year and that the court case poses no risks to operations.
After the 2005 peace accord with the Islamist government in Khartoum, the SPLA formed most of the southern autonomous government and a joint petroleum commission for the whole country which, Salva Kiir Mayardit, SPLA leader and first vice-president of Sudan says isn’t working.
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- Unpaid Debt A comprehensive overview of the role of the Lundin Consortium in the oil war. ECOS calls upon the Swedish, Austrian and Malaysian governments to investigate whether, as a matter of international law, Lundin, OMV and Petronas 'were complicit in the commission of war crimes and crimes against humanity by others during the period 1997-2003.’ In response, the Swedish Public Prosecutor for International crimes opened a criminal investigation into ‘links between Sweden and the reported crimes’.
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