ONGC Videsh expects to produce less oil and gas due to crisis

A solution to end hostilities and resume oil production continued to elude the two Sudans on Monday despite weeks of negotiations and the expiry of a September 22 deadline set by the UN Security Council.

Interim agreements

Sudan’s President Omar al-Bashir and South Sudan’s President Salva Kiir met late on Sunday night in Ethiopia to approve interim agreements thrashed out in prolonged negotiations held under the aegis of the African Union.

Talks continued on Monday. On Sunday night, Sudanese spokesperson Badr el-Din Abdallah told reporters that the two sides had made progress on most economic issues, but the “main hiccup is regarding security issues”.

At the U.N. headquarters in New York on Monday, South Sudan’s ambassador to Francis Nazario accused Sudan of not accepting an African Union roadmap for a demilitarised border zone, according to a CNN report.

A 23-km stretch along the demilitarised strip and the disputed territory of Abyei are believed to be the sticking points.

“I have no updates, we are still in meetings,” said Pagan Amum, South Sudan’s chief negotiator, in Addis Ababa on Monday evening.

Relations have been marked by hostility and mistrust since July 2011 when the South seceded from Sudan following a referendum conducted in January the same year.

The division granted land-locked South Sudan nearly two-thirds of the region’s oil reserves; while Sudan retained the pipelines, most of the refineries, and access to the Red Sea.

South Sudan shut down oil production on January 22 following a dispute over the oil transit fee demanded by the North, and accused Khartoum of confiscating $815 million worth of oil from the Port Sudan pipeline.

The two countries clashed in March and April, prompting a Security Council [UNSC] ultimatum that the warring neighbours settle a host of issues by September 22 or face possible sanctions.

As per the United Nations resolution, the two countries must settle border disputes, agree upon a demilitarised buffer zone, address the modalities for a referendum in the disputed Abyei, resolve the status of citizens of one country living in the other and resume the production and transport of oil.

The two countries arrived at a tentative deal on transit fees in August, but Khartoum insisted that the oil-deal be one part of a larger agreement on border security.

Oil accounts for 90 per cent of Sudan’s exports and 98 per cent of South Sudan’s state revenues.

ONGC Videsh stake

ONGC Videsh (OVL), a subsidiary of India’s Oil and Natural Gas Corporation Ltd, has a 25-per-cent stake in South Sudan’s oilfields and has financed and constructed a 741-km pipeline from Khartoum to Port Sudan on the Red Sea.

On Monday, OVL’s Managing Director D.K. Sarraf told reporters in New Delhi that the company expected to produce less oil and gas this year as compared to 2011-2012 due to Sudan crisis, but said OVL expected to begin pumping oil by the end of this year.

“South Sudan has agreed to pay pipeline and processing charges on crude to North Sudan. Once this gets operationalised, we expect production to resume in South Sudan,” Mr. Sarraf said.Mr. Sarraf’s comments reflect a broader optimism among international oil producers.

Last week, a Reuters report quoted China’s Special Envoy to Africa, Zhong Jianhua as saying he expected oil production to begin as early as November. China has significant investments in Sudan and South Sudan.Diplomats in Addis Ababa said the current round of talks would possibly achieve just enough to pave the way for oil exports and stave off UNSC sanctions and decide on controversial issues at a later date.

(With inputs from Sujay Mehdudia in New Delhi)

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