OVL seeks transit fee waiver to move crude oil from South Sudan to North

India, on Tuesday, raised concerns over payment of transit fee for moving crude oil from the ONGC Videsh Limited (OVL) fields in South Sudan to ports of North Sudan for exports and sought protection for exemption from any such payment as the investments were made before the African nation split into two.

The issue was raised during the meeting between the Petroleum and Natural Gas Minister, Jaipal Reddy, and the Sudanese Petroleum Minister, Awad Ahmed El Jaz, on the sidelines of the Petrotech Conference being held here.

An official of the Petroleum Ministry said the Sudan government had formed a committee which would talk to China National Petroleum Corp (CNPC), Petronas (of Malaysia) and OVL. “They are aware of our concerns, and are looking into the issues raised by us,” he added.

South Sudan last month signed a long-awaited co-operation agreement, paving the way for resumption of oil exports. It has billions of barrels of oil, but the pipeline to export it runs through the North. The South Sudan shut down production last winter after feud with North over terms.

As per the agreement reached, oil producers such as Greater Nile Petroleum Operating Company (GNPOC), in which OVL has 25 per cent interest alongside Chinese and Malaysian firms, will pay $8.40 per barrel transportation charge and another $1.60 as processing fee, according to a senior official of the Petroleum Ministry. 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. “A $1 per barrel transit fee is to be paid for allowing passage of oil. We have sought exemption as we invested in a united Sudan, and, if that country has split, why should India and its company be penalised,” the official asked.

An OVL official said it would take a few months before they could re-start production of crude oil as wells had been abruptly shut and would take sometime to revive. 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. CNPC holds 40 per cent in GNPOC while Petronas has 30 per cent. The remaining is with Sudanese national oil company Sudapet.