Sudan offers payment in oil for power project

Sudan offers payment in oil for power project
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First Published: Sun, May 02 2010. 09 15 PM IST

Energy security: A file photo of a 600MW Western Mountain Gas Turbine power project in Libya set up by Bhel. India and China are in a race to acquire stakes in scarce hydrocarbon blocks overseas.
Energy security: A file photo of a 600MW Western Mountain Gas Turbine power project in Libya set up by Bhel. India and China are in a race to acquire stakes in scarce hydrocarbon blocks overseas.
Updated: Sun, May 02 2010. 09 15 PM IST
New Delhi: State-owned Bharat Heavy Electricals Ltd (Bhel) is likely to revive an agreement to set up a 1,000MW power generation project in Sudan, for which the war-ravaged African nation is willing to pay in crude oil, two senior Bhel executives said.
Energy security: A file photo of a 600MW Western Mountain Gas Turbine power project in Libya set up by Bhel. India and China are in a race to acquire stakes in scarce hydrocarbon blocks overseas.
Bhel is already constructing the 500MW Kosti thermal project for the National Electricity Corp. (NEC) of Sudan—the country’s largest power project, expected to be commissioned this year. The Indian government has given a $350 million (Rs1,554 crore) line of credit for the turnkey contract, which is valued at $457 million.
The Kosti project agreement between Bhel and NEC was signed in 2006. At that time, a memorandum of understanding (MoU) for capacity expansion of the project was also signed, in which Sudan had offered to pay back in crude oil. But nothing came of it.
“Sudan wants to revive the MoU and wants us to set up a 1,000MW project at Sudan port instead of Kosti, as their load centre is there, through a line of credit given by the Indian government. They have also offered us to make payments through crude oil or cash,“ said a senior Bhel executive who did not want to be identified. “Since this is one of the ways to help the country’s quest for energy security, we will pursue this opportunity.”
Sudan produces around 520,000 barrels of oil a day. Three of its 22 oil blocks are yet to be explored.
The 1,000MW project could require an investment of $1 billion. The revived MoU is expected to be inked soon, the Bhel official said.
Questions emailed to NEC were not answered, while the Sudan embassy in New Delhi could not be contacted.
Bhel plans to approach ONGC Videsh Ltd (OVL), the global arm of state-owned exploration company Oil and Natural Gas Corp. Ltd (ONGC) that is already present in Sudan, to facilitate the crude offtake.
“We are yet to be approached. (But) We will be happy to help Bhel to work out the arrangement,” said a senior OVL executive on condition of anonymity.
OVL has already invested $2.5 billion in petroleum exploration and production in Sudan as part of the Greater Nile Petroleum Operating Co., in which it owns a 25% stake. Its partners are China National Petroleum Corp. (40%), Petronas Carigali Overseas Sdn Bhd (30%) and Sudan National Oil Co. (5%).
“Every country needs power—particularly the ones in Africa. We should explore such arrangements with other oil-rich nations,” said the Bhel executive quoted above.
India and China, two of the world’s fastest growing major economies, are in a race to acquire stakes in scarce hydrocarbon blocks overseas that will help them meet their rising power demand.
India plans to leverage its infrastructure commitments to secure a greater share in Sudan’s considerable oil and gas resources.
But Bhel and OVL have also faced criticism for operating in a country racked by a seven-year civil war that has caused nearly 300,000 deaths and displaced another two million.
utpal.b@livemint.com
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First Published: Sun, May 02 2010. 09 15 PM IST