Sudan To Raise Heglig Oil Output and Sign Deals

Sudan's crude oil production at Heglig oilfield will increase to 80,000 barrels per day and exploration deals for six blocks will be signed soon, as it moves to make up for a big loss in oil exports, its oil minister said. "We assure you the oil ministry is moving along in its programme for this year, to upgrade production and increase it from blocks 2 and 4, which represent the Heglig area, to a ceiling of 80,000 bpd of crude," Awad Ahmed al-Jaz told parliament.

South Sudan inherited three-quarters of the oil when it gained independence from its northern neighbour last July, leaving Sudan with a capacity of about 115,000 bpd. The South needs to export its crude via the north to a Red Sea terminal at port Sudan, but both countries have been unable to agree on an oil transit fee, escalating the dispute. South Sudan shut down its entire oil production to stop Khartoum from taking oil to make up for what it calls unpaid fees for transit and use of its facilities.

The dispute erupted into border clashes, and at one point South Sudan seized Heglig which it contests, before later withdrawing under international pressure. Sudan's oil minister said last week Heglig, which had a capacity of about 55,000 bpd, had been repaired and was pumping oil again but he did not give an amount. Heglig is central to Sudan's economy, which has already had to cope with the loss of oil revenues after the south seceded. On Tuesday, the finance minister said the dispute had created a $2.4 billion gap in Sudan's public finances and caused exports to plunge 83 percent. The Heglig field is operated by Greater Nile Petroleum Operating Co (GNPOC), a consortium of Chinese, Malaysian, Indian and Sudanese companies. GNPOC said in March it would go ahead with plans to increase output to 70,000 bpd from 60,000 bpd. It is unclear whether the damage Heglig suffered would affect those plans.

Jaz said a global tender had been conducted for six unlicensed blocks and exploration deals would be signed in the coming month. "We received more than 70 offers from international companies," Jaz said.