Home | News    Monday 21 February 2005

South Sudan Official: Total, Marathon, KPC rights invalid

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By Simeon Kerr

DUBAI, Feb 21, 2005 (Dow Jones) — Potentially lucrative oil rights reassigned to Total SA (TOT), Marathon Oil Corp. (MRO) and Kuwait Petroleum Corp. (KPT.YY) are invalid, with a share of Total’s awarded to London-listed White Nile Ltd. (WNL.LN) instead, a southern Sudanese official said Monday.

Kuol Manyang Juuk, finance commissioner for the former rebel Sudanese People’s Liberation Movement, said the soon-to-be-formed government of South Sudan didn’t recognize any deal between those foreign companies and the government of Sudan in Khartoum for Block B in the south of the country.

"We’ve signed with White Nile," Juuk told Dow Jones Newswires from Nairobi, Kenya. He said the deal had been first negotiated a couple of years ago, but wouldn’t say when it was finalized. Former England cricketer Phil Edmonds is among the company’s backers.

A Total spokesman said it was unaware of any changes to its rights, while KPC and Marathon officials couldn’t be reached for comment.

White Nile officials declined to comment but last week said it had signed a deal with the government of South Sudan for a 60% interest in the 67,500 square kilometer Block Ba.

Its AIM-listed stock rose thirteen-fold in a feverish run on the news of the deal before being suspended at 138.5 pence pending further details on the agreement this week.

Earlier Monday, Sudan’s Oil Minister Awad al-Jaz told Dow Jones Newswires the central government hadn’t signed an exploration deal with White Nile. "If you look at the agreement, the only place to go for a concession is the oil ministry," the minister said.

But Juuk, who handles oil matters for the SPLM, said Block B, a 110,000 square kilometer area vacated by Total in the mid-1980s due to the violent north-south civil war, would be split up and reawarded to foreign companies.

Last December, Total, Marathon and Kuwait Petroleum Corp’s foreign upstream arm quietly signed an agreement with Khartoum to keep its oil interests in the country intact.

"This oil is in the south," said Juuk. "Khartoum has no right to sign a concession without the south’s agreement."

But analysts say the legalities of White Nile’s supposed deal aren’t certain.

January’s peace agreement, which ended decades of bloody civil war, will set up a national petroleum commission to award oil concessions to firms.

But Total inked its revived production sharing agreement with the Khartoum government ahead of the signing of the peace agreement.

"The SPLM isn’t really in a position to award concessions now, especially if there is an existing agreement with the government," said Josh Mandel, Middle East analyst with Control Risks Group (CRG.YY), a security and political risk consultancy.

The petroleum commission will include both federal government and southern government officials, as well as local representatives from the area involved.

The commission members from the federal government, as well as those from the south, will have to agree unanimously to any contract award, says David Mozersky, Sudan analyst for International Crisis Group.

"If there is disagreement, the issue is deadlocked," said CRG’s Mandel.

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