Page 5 - AfrOil Week 38

AfrOil COMMENTARY AfrOil

This request drew a positive response, at least the possibility of withdrawing from GNPOC. It
initially. However, GNPOC’s shareholders say reportedly informed officials in Khartoum of its
they have never been paid for their oil. Accord- position shortly after the country’s previous gov-
ing to the sources inside the Indian company, ernment, headed by Ali Bashir, stepped down.
OVL’s share of overdue payments for this crude
now amounts to nearly $431mn. Impact on local fuel sector
Now it appears that OVL has definitely decided
Overdue payments in favour of withdrawal.
Additionally, the sources say, Khartoum owes The company has not officially confirmed “
OVL another $99mn. This sum, they explained reports to this effect, but its representatives – GNPOC’s
last week, represents the Indian firm’s outstand- including some high-ranking managers – have
ing share of the cost of building the 741-km sec- told the Indian press that this move is in the shareholders say
tion of a pipeline from Khartoum to Port Sudan. works.
Sudanese authorities had originally pledged If so, the exit appears to be justified – and not they have never
to provide OVL with a total of $254mn as com- just because the Sudanese government is not been paid for
pensation for 90% of project costs and rental meeting its financial commitments. GNPOC is
fees. also a relatively minor asset. As of mid-Septem- their oil
They said in 2005 that they would make up ber, the consortium was only producing about
that sum by 18 payments of $14.135mn each, 28,000 barrels per day (bpd) of oil from Block
with the first payment to be submitted on 2A. It was also extracting no oil whatsoever from
December 30 of that year, and subsequent pay- Block 4, which has yet to move past the explora-
ments to be made every six months. tion phase.
According to OVL, Khartoum only made 11 Under current market conditions, this small
of the 18 promised payments, with the last com- amount of oil hardly seems to be worth the
ing near the end of 2010. Since then, it has not trouble.
turned in the remaining seven payments, which Certainly, OVL’s partners appear to have
were supposed to total $98.94mn – that is, the reached the same conclusion. Indian news
$99mn sum mentioned above. agencies reported last week that the other for-
Additionally, it said in late 2016 that it would eign shareholders in GNPOC – China National
not grant GNPOC’s request for an extension of Petroleum Corp. (CNPC), the operator, with
the contract for Block 2B. As a result, the acreage 40%, and Petronas (Malaysia), with 30% – were
under the consortium’s control shrank. also quitting the project. (Presumably state-
At first, the Indian firm hoped that making its owned Sudapet will hold on to its 5% stake.)
case through diplomatic pressure would suffice, This is not good news for Sudan. The country
so it asked New Delhi to press its case with Khar- has already experienced multiple rounds of fuel
toum. After this tactic failed, though, it filed an shortages this year, and it is likely to experience
arbitration case against Sudanese authorities. further supply disruptions if its refineries lose a
And in 2019, it started talking publicly about source of feedstock. ™

GNPOC is now developing the Sudanese portion of the original concession (Image: USAID)
GNPOC is now developing the Sudanese portion of the original concession (Image: USAID)

Week 38 23•September•2020 www. NEWSBASE .com P5