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New Delhi, May 2: ONGC Videsh Ltd is quitting an oilfield in Sudan as the African nation has sought higher royalties and taxes to extend the licence to operate the field.
The licence for Block 2B, which expired last November, was eligible for an automatic extension of five years. But Sudan, whose revenues have been hit with a drop in oil prices, wanted higher taxes and royalties before it agreed to the extension, industry officials said.
OVL, which held a 25 per cent stake in the block, and its partners China National Petroleum Corp (CNPC) and Malaysia's Petronas did not agree to the demand.
Sudan started talks with France's Total, UK's Tullow Oil and the Kuwait Foreign Petroleum Exploration Company for the block. However, the talks have broken down over "irreconcilable differences", reports said.
The South Sudan petroleum minister has said they were ready "to open opportunities to other potential investors."
In 2003, OVL had bought a 25 per cent stake in the Greater Nile Oil Project (GNOP), comprising Blocks 1, 2 and 4 in undivided Sudan. It lies in the prolific Muglad basin, about 780 km to the south-west of Khartoum, the capital of Sudan. The project produces about 50,000 barrels of oil per day (bpd).
Upon the secession of South Sudan from Sudan in July 2011, Blocks 1, 2 and 4, spread over both the areas, were split with a major share now situated in South Sudan. Blocks 2A, 2B and 4N are in Sudan, and blocks 1A, 1B as well as 4S are in South Sudan.
Block 2B produces 28,000 bpd of oil, while Block 4 is in the exploration phase.
Industry official said OVL and its partners CNPC (40 per cent stake), Petronas (30 per cent) and Sudapet of Sudan (5 per cent) wanted a 5-15 year extension, but Sudan did not agree. The previous 20-year contract expired in November 2016.
Crude produced from the project is transported through a 1,504km pipeline to Port Sudan on the Red Sea.
