OVL plans to restart crude production from South Sudan fields

OVL plans to restart crude production from South Sudan fields New Delhi: ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), plans to restart crude oil production from its fields in South Sudan in next few weeks, company sources said today.

OVL and its partners had in January shut oil production from the Greater Nile Petroleum project after a dispute between South Sudan and Sudan over pipeline transit fees.

Production can resume within a few weeks following resolution of the dispute, sources said adding output may start as early as mid-December.

South Sudan in September signed a long-awaited cooperation agreement, paving the way for resumption of oil exports. South Sudan has billions of barrels of oil, but the pipeline to export it runs through the north. The south shut down production in January after feud with north over terms.

As per the agreement reached, oil producers like Greater Nile Petroleum Operating Company, where ONGC Videsh Ltd has 25 per cent interest alongside Chinese and Malaysian firms, will pay USD 8.40 per barrel transportation charge and another USD 1.60 as processing fee, sources said.

Further, a USD 1 per barrel transit fee is to be paid for allowing passage of oil.

Sources said OVL is seeking exemption from payment of the transit fee on moving crude oil from its fields in South Sudan to ports in North for exports, saying fiscal stability prudence demands that its investment made before the African nation was split into two should be protected.

GNPOC produced about 85,000 barrels per day of crude oil before the fields were shut. OVL's share in it was 25 per cent.

GNPOC concession in the Western Upper Line area include the large Unity and Heglig oil fields plus smaller fields at El Toor, El Noor, Toma South, Bamboo, Munga and Diffra. China National Petroleum Corp (CNPC) holds 40 per cent in GNPOC while Petronas of Malaysia has 30 per cent. The remaining 5 per cent is with Sudanese national oil company Sudapet.

Post secession of South Sudan from Sudan with effect from July 9, 2011, the OVL's oil Blocks 1,2 and 4 straddle between the two countries and Block 5A is now entirely in South Sudan.

The production from part of Block 1,2 and 4 falling under South Sudan and Block 5A is likely to resume in next few weeks, sources added.

PTI