India’s $3 bn oil stake in South Sudan now looks safe

August 4th, 2012 - 8:08 pm ICT by IANS  

Addis Ababa, Aug 4 (IANS) The state-run Oil and Natural Gas Corp (ONGC) can heave a sigh of relief, with signs of a truce, at least in oil, between Sudan and South Sudan raising hopes that India’s $3 billion investment in the world’s newest nation is safe.

“It’s an (oil) agreement about all of the matters. The issues that were outstanding were charges for transportation, for processing, transit,” former South African President and African Union mediator Thabo Mbeki told reporters here.

“What will remain is to then discuss the steps as to when the oil companies should be asked to prepare for the resumption of production,” Mbeki said in this city, which houses the African Union, where the two nations are negotiating.

The development coincided with US Secretary of State Hillary Clinton’s visit to South Sudan’s capital Juba Friday, asking the country to resolve its bitter differences with its northern neighbour, a day after the expiry of a UN deadline to them to show progress.

The Indian company’s overseas arm, ONGC Videsh has a stake in Greater Pioneer Operating Company, which operates blocks in South Sudan’s Unity state. China National Petroleum Corp leads this consortium with Malaysia’s Petronas and ONGC Videsh as partners.

Of a total of five assets ONGC Videsh bought in united Sudan, three are in the south. After the split, the partners had three months to form the new joint operating company in Juba.

South Sudan, which separated from Sudan July 9 last year, and repository to 75 percent of united Sudan’s oil, capped all its oil production since Jan 24, denying the north transit revenue of $36 a barrel for use of its two pipelines into the Red Sea.

The Indian company has since been twiddling its thumbs over months in Juba, with a skeletal staff of two, not knowing when the fierce east-African rivals will eschew mutually-assured destruction.

The two Sudans now have time till Sep 22 to settle their other outstanding issues.

On transit fee, Juba said last it was willing to pay $9.10 and $7.26 per barrel to use the two pipelines crossing Sudan, alongside a $3.2 billion package to compensate for the loss of most oil reserves to the South. It had previously offered $2.6 billion.

Sudan itself lowered its demand to $15 a barrel per pipeline, down from $32, according
to officials in know of the developments. It had, at least until last week, insisted on $36 a barrel.

The deal is a bigger shot in the arm for the Chinese.

They own the pipeline and a refinery in Sudan adding up to a stalled investment of $20 billion. Beijing recently dangled a $8-billion loan to Juba to dissuade President Salva Kiir Mayardit from ruining the plot and building alternatives via a third country.

Beijing is also the dominant partner in the new joint operating company where ONGC Videsh has retained 25-percent equity. Petronas, Transocean, and South Sudan local national oil company have the remaining.

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