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Sudan: Total to Start Oil Drilling After Court Victory
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Business Daily (Nairobi)
26 June 2008
Posted to the web 26 June 2008
Badru Mulumba
Oil drilling is set to start at a formerly disputed area of Sudan, after a successful defence of mining rights by French oil giant Total in a London court.
Total got a judgement on the case last year and has since set up the base camp on location where they are mobilising facilities. A base camp stores drilling and disposal facilities. Its setting up ends uncertainty over the possibility of the drilling beginning before 2011 - the period covered by the peace agreement.
Usual flooding
Actual drilling work on the 67,000 square-kilometre are, is expected to start in October.
"This is the rainy season in places like Upper Nile and Jonglei, there's the usual flooding," Southern Sudan's Energy Minister John Luk said.
"Once the money is put together and the budget is complete, it will take another few months, up to October. After October, they will start moving."
Total reclaimed rights to oil block B after a three-year battle with a tiny UK based firm, White Nile. A London court in 2006 ruled in favour of the French oil firm.The French oil firm is part of an incomplete consortia that would develop the oil block.
"As you are aware, there was an American company, Marathon, which pulled out," Luk said. "So what we are doing now is to complete the consortium."
Total E&P Sudan, in 1980, signed an Exploration and Production Sharing Agreement with Sudan on oil blocks in southern Sudan, including block B - the main area for Total's exploration activity - alongside American firm Marathon Petroleum (32.5 per cent), Kuwait's Kufpec Sudan Ltd (25 per cent), and State-owned Sudapet (10 per cent).
The Sudan civil war, breaking out in 1983, brought work to a standstill, forcing Total to suspend work, in 1983, just as the consortium was about to drill 3 oil wells.
Total's rights to the oil were extended annually until late December 2004, when the firm signed the Revised Exploration and Production Sharing Agreement with the Sudan government to update the 1980 contract.
Marathon's withdraw has led to changes in the shareholding, with Total at 32.5 per cent, and Kuwaiti firm Kufpec Sudan Ltd 27.5 per cent.
The Sudan-owned Sudapet and the southern Sudan government-owned Nilepet own 10 per cent each, leaving Some 20 per cent of the stake in the oil block not apportioned.
Luk said the consortium partners are expected to draw up a budget, which would determine each firm's contribution, and what they would need from a new partner in the block."Once that is done, we will complete the consortium," Luk said.
Remaining bid
Several companies, Chinese firms China National Petroleum Corp. and Sinopec (SHI), United Emirates firm Mubadala Development Company, and Tri-Ocean Energy, controlled by Kuwait's al-Kharafi family, have bid for the remaining 20 per cent in the consortium.
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"It must have the financial and technical competency to take part in the project," Luk said of what they are looking for in a partner. "Already, there's Nilepet, Sudapet, all these form part of the consortium, including the Kuwait Company."
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