Sudan signs oil deal with two smaller European firms
* Marks fresh European interest after civil war
* Luxembourg's Star Petroleum to invest $200 mln
KHARTOUM, Aug 6 (Reuters) - Sudan on Friday signed a new onshore exploration deal for a 50,000 square kilometre Block E with two European companies, who called for other Western companies to invest in the U.S.-sanctioned oil producer.
The contract sparks renewed European interest in Sudan's oil sector, which had looked east to Chinese, Indian and Malaysian companies to extract its almost 500,000 barrels per day as European companies withdrew during a 1983-2005 north-south civil war worried about the implications of rights abuses.
"Come and invest in Sudan, there are many professional people and great opportunities this is our message to all of the European companies," said Farshad Zandi from the Star Petroleum company, based in Luxembourg which holds a 75 percent share of the block.
Zandi added the Norwegian Hamla company, which he said was part of AGR Group, would take five percent. Sudan's two national oil companies, Sudapet and Nilepet, would take the remaining 20 percent.
Total (TOTF.PA) is the main European presence in Sudan's oil sector which has conducted minimal work on its block, after legal disputes over the contract. Investors are wary of a looming January southern referendum on independence which most analysts say will result in secession.
Most of Sudan's oil reserves lie along the still disputed north-south border.
Star Petroleum already operates in the Caspian Sea, Yemen, and Iran and hopes to move into Angola, Zandi told Reuters, adding it had set aside $200 million to invest in Sudan.
"We don't have any information on this block yet but we heard that it's a very promising block -- we know this because around us there was more than 10 million barrels discovered," Zandi said of neighbouring oil blocks.
Block E traverses four southern states -- Northern Bahr el-Ghazal, Western Bahr al-Ghazal, Lakes, Warrap -- and South Darfur in north Sudan.
Head of exploration at Sudan's energy ministry, Azhari Abdel Gadir told Reuters they hoped drilling could begin after three years of initial exploration with an investment of $20 million.
"The contract will last for 20 years with a potential renewal period of 5 extra years with a six-year exploration period at the beginning," he said.
"It's too difficult to talk about potential production or reserves but it is near to Block 5a...so it is expected that a light or medium oil will be found."
Sudan produces the sweet Nile Blend from Block 5a and a heavier Dar Blend from its blocks in the Melut Basin. It also produces the highly acidic Fula blend, largely for domestic use.
The Oil and Gas Journal estimates Sudan's oil reserves at 5 billion barrels.
(Editing by Sofina Mirza-Reid)
- Database Search
- 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’.
- In Depth For more specific information about the Lundin court case please visit the Unpaid Debt dossier.
