The government of Sudan has delayed an extension to ONGC Videsh’s licence on Block 2B as it seeks higher royalties, tax and profit.

According to officials, ONGC’s licence for Block 2B expired a week ago and an automatic 5-year extension to the licence was available, but Sudan, whose income had been affected by the drop in crude oil prices, wants higher taxes and royalties before any agreement can be made, even as it delays paying close to $300 million in oil dues.

In 2003, OVL, the overseas arm of ONGC, bought a 25% stake in Greater Nile Oil Project (GNOP) which comprises of Block 1, 2 and 4 in Sudan. The project produces about 50,000 barrels of oil per day (bpd). Other partners in the projects are CNPC with 40% stake, Petronas with 30% and Sudapet with 5%.

After the separation of South Sudan from Sudan in July 2011, the contract areas of blocks 1, 2 and 4, which covers both areas, were divided with the most important share of production and reserves now based in South Sudan. Blocks 2A, 2B and 4N are in Sudan, while blocks 1A, 1B and 4S are in South Sudan.

The officials said OVL and its partners want a between 5 to 15-year extension, but Sudan is yet to agree. In addition, Sudan is yet to pay OVL dues worth $98.94 million for the oil consumed from GNOP, Business Standard reports.

Anita Fatunji