Total, South Sudan Government in talks over split oil block
Total SA said it’s in talks with South Sudan’s government about the state’s decision to split an oil concession that it previously held a controlling stake into three blocks.
South Sudan last month invited bids from oil companies to develop two new concessions that had been part of Block B, while granting control of the third to Paris-based Total, according to government spokesman Barnaba Marial Benjamin.
“Total confirms that it has entered into discussions with South Sudanese authorities regarding the contractual terms on Block B,” company spokesman Florent Segura said in an e-mailed response to questions yesterday.
Total signed an exploration and production-sharing agreement with the government of Sudan in 1980, before suspending work in 1985 because of “escalating insecurity” related to a civil war, according to the company’s website. Total says it signed a revised agreement with the Sudanese government in 2004.
South Sudan seceded from Sudan in July 2011, taking control of about three-quarters of Sudan’s output of 490,000 barrels of oil a day. Benjamin said Total’s ownership of the block was invalidated because it was signed with Sudan before the south gained independence. He said splitting up the block would encourage more foreign investment in the oil industry.
Contract Negotiations
In January, Oil Minister Stephen Dhieu Dau said his government would begin contract negotiations with companies holding unexploited concessions including Total. On Feb. 2, Segura said Total planned to submit a “preparatory work program” to the authorities for their approval.
Total “hopes to be able to proceed soon with planned operations on Block B, as soon as the necessary approvals by relevant authorities are obtained,” Segura said yesterday.
South Sudan is keen to develop new oil fields and plans to build a pipeline to the Indian Ocean via neighboring Kenya or through Ethiopia to the coast of Djibouti. Oil in Block B may be key to financing such a project, said Philippe de Pontet, Africa director with Eurasia Group, the New York-based research group.
“Juba may also be looking to open up acreage for those willing to invest in a southern pipeline through Kenya, a daunting prospect that will require significant sweeteners to get off the ground,” he said in an e-mailed response to questions today.
Ethnic Clashes
Block B covers most of Jonglei, a state plagued by ethnic clashes, rebel attacks and deadly cattle raids. The United Nations says more than 1,000 people were killed in battles between the Murle and Lou Nuer communities last year, while about 900 more died in fighting that lasted from late December until February 2012. The government said an Aug. 23 attack by a rebel militia group killed at least 24 of its soldiers.
De Pontet said Block B has been “controversial” with South Sudanese officials because of factors including its “enormous size” and its undeveloped status, as well as Total’s historical ties to the Sudanese government.
“The Sudan People’s Liberation Movement, which now heads the independent nation of South Sudan, tried to break up the concession in the past, for example by unilaterally granting licenses to well-connected commercial allies like White Nile,” he said.
White Nile
In 2005, a U.K. oil company called White Nile Ltd. said it was awarded the rights to most of Block B, according to Total’s website. On June 17, 2007, an oil commission comprised of officials from the national and southern governments confirmed a London court ruling five months earlier that Total had sole rights to the concession, the website says.
That decision was made during the six-year period of southern autonomy that preceded independence and followed a 2005 peace agreement that ended the two-decade civil war. The peace deal stipulated that Khartoum and the southern government share oil revenue 50-50.
Benjamin said the newly independent government decided Block B was “too big for one company.” Chinese, European and U.S. companies, including Exxon Mobil Corp. and Chevron Corp., are among the bidders for exploration rights in the two new blocks, he said.
Oil in South Sudan is pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s ONGC Videsh Ltd.
- 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.
