By Eric Watkins
Middle East Correspondent
NICOSIA, Sept. 11 -- Austria's state-run OMV AG oil and gas group has signed an agreement to sell its interest in two exploration blocks in Sudan to ONGC Videsh Ltd. (OVL) for $115 million. OVL is the international arm of India's state-owned Oil & Natural Gas Corp. (ONGC).
The deal, which will have commercial effect as of Jan. 1 of this year, is subject to approval by the Sudanese government and OMV's partners in the blocks.
OMV is divesting itself of its 26.125% working interest in Block 5A, and its 24.5% working interest in Block 5B, both in the Muglad basin, 700 km southwest of the Sudanese capital Khartoum.
Petronas Carigali Overseas Sdn. Bhd. of Malaysia is operator of Block 5A, with 68.875% stake. The block contains undeveloped Thar Jath field, which has gross proven and probable oil reserves of 149.1 million bbl. Sudan's national oil company Sudapet Ltd. holds the remaining 5%.
On Block 5B, Petronas has 41%, Sudapet 10%, and Swedish oil concern Lundin Petroleum AB, Stockholm, 24.5%.
Blocks 5A and 5B are adjacent to the Greater Nile Oil Project, where OVL acquired a 25% stake in March this year from Talisman Energy Inc. of Canada (OGJ Online, Mar. 28, 2003).
"This is an important acquisition for OVL, as it consolidates our presence in [an] oil bearing region which continues to show high potential and also strengthens the company's position as a major player in the global oil and gas market," OVL Managing Director Atul Chandra said.
Human rights charges
OMV is the third western company to sell oil properties in Sudan, following numerous reports documenting human rights abuses around the oil fields and campaigns by human rights and religious groups.
It was following long-term pressure from rights groups that Talisman sold its interests to OVL, while Lundin sold some of its shares in June to Malaysia's Petronas.
The religious and human rights campaigners say Sudan's oil industry�worth at least $1 billion a year� has exacerbated the country's 20-year civil war by providing the revenues that pay for it.
The New Sudan Council of Churches reiterated last month its position that all oil exploration and exploitation should cease in Sudan until a comprehensive peace agreement had been signed between the government and the Sudan People's Liberation Movement-Army rebel group.
OMV was criticized for its resumption of activities in Sudan in March, having suspended them since January 2002 for "security reasons." The company said that "positive developments in the peace process," had enabled it to return.
At the forefront of the lobby campaign in Austria was Sudan Plattform Austria, a group of church bodies and NGOs, which said that the only way to "normalize" OMV's activities in Sudan would be in the context of peace.
Helmut Langanger, the member of the OMV Board of Management responsible for exploration and production, said the company obtained "a good price for our Sudanese exploration interests. The proceeds will now be invested in the further expansion of our oil and gas production."
Langanger added: "We are always striving to optimize our portfolio. Even when taking the long-term exploration and production potential as well as the continuing peace process in this country into consideration, the sale of our Sudanese interests is the right decision for us."