Sudan owes ONGC Videsh Ltd (OVL) a total of $560 million in unpaid oil dues and pipeline costs, Minister of State for Petroleum and Natural Gas, Rameswar Tel, told the parliament on Monday.
OVL, the overseas arm of the state-owned Oil and Natural Gas Corporation (ONGC), held a 25 per cent stake in Block 2A&4 in Sudan.
Sudan has not paid OVL and partners for oil it bought from the block since 2011.
“The amount due to OVL on account of over lifting of crude oil under the Exploration and Production Sharing Agreement (EPSA) is $339.75 million and under sale and purchase agreement (SPA) is $90.94 million, which amounts to $430.69 million in total,” he said in a written reply to a question in Rajya Sabha.
The company has also not been paid for the pipeline it built from Khartoum to Port Sudan, which stretches 741 km.
In an effort to recover the dues, the company initiated arbitration proceedings against the Sudanese government and terminated the Exploration and Production Sharing Agreement (EPSA).
In a Sovereign Guarantee-Pipeline Contract Agreement (SG-PCA) arbitration between OVL and Sudan’s government, OVL is requesting $98.94 million principal amount as well as interest and damages for undelivered and delayed payments from the government, Tel said.
Sudan admits to owing $131 million to OVL in pipeline dues before the arbitration tribunal.
“The Sudan government, in its statement of defence, has admitted about the unpaid instalments amounting to $98.94 million and interest of $31.0 million payable on unpaid and delayed instalments,” the minister said.
The arbitration tribunal at the International Court of Justice in Hague is hearing the matter.
“The outcome of the arbitrations are contingent on the Hon’ble Permanent Court of Arbitration, based outside India,” he said.
OVL acquired a 25% stake in the Greater Nile Oil Project in Sudan in 2003. China’s CNPC owns 40 per cent of the project, Malaysia’s Petronas owns 30 per cent, and Sudan’s Sudapet owns 5 per cent.
The GNOP consists of on-land blocks 1, 2 and 4 spread across 49,500 sq km in the Muglad Basin, which is located about 780 km southwest of the capital city of Khartoum.
A 1,504-kilometer pipeline transports crude oil produced in the GNOP field to Port Sudan on the Red Sea.
Following the secession of South Sudan from Sudan in July 2011, the contract areas of Blocks 1, 2 and 4 which straddle Sudan and South Sudan were split with the majority of production and reserves now situated in South Sudan.
Since the Government of Sudan’s share of total production from Sudan had not been sufficient to meet the needs of local refineries after secession, foreign firms were asked to buy their share of crude oil from it.
However, the payment of dues on account of crude oil purchased by the Government of Sudan has not been received.
OVL had along with state-owned Oil India Ltd constructed and financed a 741-km multi-product pipeline from the Khartoum refinery to Port Sudan for USD 19194 million.
OVL’s share of the project cost was 90 per cent, while the rest was borne by OIL.
The pipeline was handed over to the government of Sudan in October 2005. The lump-sum price, together with lease rent was required to be paid to OVL in 18 equal half-yearly instalments effective from December 2005.
The project cost and rental totalled USD 254 million, which equated to 18 half-yearly instalments of USD 14.135 million each starting from December 30, 2005. The company got a total of 11 instalments (USD 155.48 million) till December 2010 and the balance seven instalments amounting to USD 98.94 million remained outstanding.
The remaining seven instalments due from June 30, 2011, to June 30, 2014, are yet to be released.
OVL, whose share of investment in the project was USD 158.01 million, has been following up for the realisation of USD 98.94 million from the government of Sudan at various levels but hasn’t succeeded so far.
This prompted the company to drag Sudan to arbitration.
Sudan had denied ONGC NSE -1.75 % and partners an extension of licence to operate block 2B after the initial contract expired in November 2016.
