OVL to resume production from South Sudan asset

Reports indicate that ONGC Videsh (OVL), the overseas unit of state-owned Oil and Natural Gas Corp, decided to resume production from its oil field in south Sudan hoping that the issue of transit fee for may be resolved amicably.

Daniel Peter Othol, South SudanÂ’s ambassador to India mentioned that crude oil would flow by the end of this month.

The Sudan government has been asking foreign companies $5 per barrel as transit fee. ONGC, along with its partners, plan to negotiate on the issue of transit fee and in the meanwhile, it would begin production, reports indicate.

South Sudan, created in July 2011, owns 85 percent of undivided SudanÂ’s hydrocarbon resources, but the North, known only as Sudan, has the entire refining infrastructure.

Sudan had earlier been demanding a fee of $36 per barrel for allowing South Sudan use its infrastructure, which the latter had termed as unjustified. Oil accounts for about 98 percent of South SudanÂ’s revenue, with output of around 350,000 barrels per day.

There are two types of charges that are to be paid to the government of Sudan. One is the transit fee and the other is the transmission and processing fee.

The transit fee that has been agreed between the governments of Sudan and South Sudan is for the governmentÂ’s portion of the South Sudan crude agreed at $1 per barrel.

OVL expects to produce 6.865 million tonne (mn t) of oil and equivalent gas in 2012-13, lower than around 8.753 mn t in the previous year because of strife in South Sudan and Syria.