Sudan signs deals with oil companies for 9 blocks

Sudan has signed oil exploration and production-sharing deals with foreign companies on nine blocks, a senior oil official said, sealing investments of $1 billion in Sudan, which is struggling to deal with a big loss in oil revenues. State Oil Minister Ishaq Adam Gamaa said Thursday Canadian firm Statesman Resources Ltd as well as Chinese, Nigerian, Australian, Brazilian and French companies had signed the agreements. State-owned oil and gas firm Sudapet was included in the deals. Seven blocks were awarded for the first time, while some companies joined previously awarded contracts for two other blocks, Gamaa said. Some of the blocks are near the northern border with Egypt, some are offshore and others are near Kassala in eastern Sudan and in Khartoum state. "The initial investment needed for these blocks is $1 billion. It will not be cash given to Sudan, but money that will be invested by those companies," Gamaa told Reuters. Gamaa said there would be no production at the new blocks for several years while companies carry out magnetic surveys, seismic data and drilling of exploratory wells. "We cannot say when we'll produce. There are several activities that need to be done towards production. They will take several years," he said. Gamaa said the government's share of oil would depend on data from each block. "The government priority will be to meet domestic demand and export the surplus," he said. Gamaa said Sudan was currently producing 115,000 barrels per day (bpd) and by the end of 2012 would add another 65,000 bpd. The north African country lost three-quarters of its oil output when South Sudan gained independence last year, leaving the oil-dependent economy reeling from a sudden loss in state revenues, which has led to an estimated $2.4 billion budget deficit. The economy, strapped for foreign currency, was already feeling the effects of U.S. trade sanctions, double-digit inflation and a weakening currency, all of which led the government to introduce austerity measures including the scaling back of fuel subsidies. The rise in fuel prices has spurred protests across the country over the past two and a half weeks calling for President Omar Hassan al-Bashir's government to resign. A dispute with South Sudan earlier this year also damaged the strategic Heglig oilfield, which is central to Sudan's economy. Gamaa said Heglig was now fully operational and producing 40,000 bpd. A source in the oil industry said Heglig's average production was running around 40,000 bpd a day and had been fluctuating between about 37,000 and 47,000 bpd. The source said he did not know how long it would take to restore the previous production levels of 55,000 to 60,000 bpd.