India puts $1-B cap on investment in Sudan

Wednesday, 21 January 2004, 08:00 Hrs
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NEW DELHI: India has put a cap of $1 billion on investment in Sudan, where oil major ONGC Videsh Ltd (OVL) is acquiring stake in yet another exploration block.

State-owned OVL's plans to acquire 11 percent stake in the Alpha Project block in Sudan were approved Tuesday night by the cabinet, Petroleum Minister Ram Naik said here Wednesday.

The Alpha Project is expected to fetch India another one million tonnes of oil annually from 2007, Naik said.

The stake will comprise five percent equity of the Al-Thani Group of the United Arab Emirates and six percent of Gulf Petroleum Corporation of Qatar.

"The government has decided to put a cap of $1 billion exposure in Sudan," Naik said on the sidelines of a two-day workshop organised along with International Energy Agency (IEA) here to study issues related with India's plans to set up emergency oil reserves.

The government decided to set up a technical committee, comprising the cabinet secretary, the finance secretary and the petroleum secretary to study and work out the details of the Sudan investments, said Naik.

With the latest acquisition in exploration blocks in Sudan, OVL - the overseas arm of Oil and Natural Gas Corporation - will take yet another step to secure equity oil.

In the earlier two rounds of acquiring equity stake in Sudan, it had taken 25 percent stake in the Greater Nile Project, a producing oil field that is fetching India three million tonnes of oil annually.

The other stake has been acquired from Austria-based OMV Aktiengesellschaft - 26.12 percent in block 5A and 24.5 percent stake in block 5B located in the Muglad basin near the Greater Nile Project.

OVL had invested around $669 million in the Greater Nile Project, and had acquired 26.125 percent stake in Block 5A for $128 million and $34 million for the stake in block 5B.

"With the oil prices ruling high, our investments in the Greater Nile Project have brought in $250 million returns in the nine month period. At this rate we hope to get back our investment in the project in the next three years, much ahead of expectations," said Naik.

He indicated that these returns would be ploughed back into Sudan, nullifying the need for investments over the $1 billion cap.

"By ploughing back the returns we will be able to maintain the $1 billion cap," he said.

The minister revealed that for acquiring stake in the Alpha Project, OVL would be paying around $125.5 million -- with the Al-Thani Group to be paid $57 million and Gulf Petroleum $68.49 million.

The Alpha Project comprising three blocks has established reserves of 774 million barrels of oil and estimated reserves of 3.5 billion barrels.

The other partners in the project are Malaysian state-owned oil company Petronas with 40 percent stake, Chinese national oil company CNPC with 41 percent and Sudan's national oil company Sudapet with eight percent.

Source: IANS
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