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ONGC Videsh Ltd (OVL) and the Government of Sudan have held talks on mitigating the issue of payment default to OVL.
The talks progressed on August 7 when a Sudanese government delegation reached Delhi.
An OVL statement said, “It was informed that the Sudan government is hopeful that its economic situation shall be improving henceforth with the recent agreement it reached with the Government of South Sudan on resumption of crude oil transportation from South Sudan territory through the Heglig-Port Sudan pipeline.”
OVL had dragged Sudan to an international arbitration court to recover over $400 million in unpaid oil dues pending since 2011. The claim has been filed in a London court to recover about $300 million for oil Sudan bought from OVL’s Greater Nile Oil Project and another $98.94 million in unpaid pipeline rent lease.
Sudan split
The dues started to accumulate when Sudan and South Sudan split in July 2011. After the division, a majority of the crude oil production and reserves were situated in South Sudan. Further, the total production in Sudan was not sufficient to even meet requirements of domestic refineries and eventually, foreign firms were asked to sell their share of crude oil to the government.
But the payment for these crude oil purchases by the Sudan government has been pending since.
The other dues to OVL are for a pipeline, which was handed over to the Sudan government in October 2005. The payment together with lease rent was to be made in 18 equal half yearly instalments from December 2005. The payment was received till December 2010 and the remaining instalments were not honoured.
This prompted OVL to drag Sudan to an arbitration from which the visiting delegation requested OVL to withdraw.
Arbitration proceedings
The OVL statement, however, noted that the arbitration proceedings will continue for now. OVL said, “It was further informed by ONGC Videsh that keeping the legal intricacies in view, the arbitration process can continue while both sides work together on suitable mechanism of resolving the issues.”
OVL also agreed to depute a team of senior level officials to Sudan for initiating techno-commercial discussions afresh to work out a way forward for settling past dues. Subsequently, the OVL team arrived at Khartoum on August 13 and discussions with the Sudanese side are presently ongoing, the statement added.
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