French oil major, Total is in talks with Qatar Petroleum International (QPI) over the formation of a upstream joint venture in the semi-autonomous South Sudan region.
QPI could be in line for a 20 per cent stake in the 118,000 square kilometre Block B concession in South Sudan, according to sources close to the scheme.
Total has faced numerous problems in getting its exploration programme at the block started. Apart from conflict in the area, the current consortium has been seeking a partner to replace the US’ Marathon Oil which was forced to pull out of its 32.5 percent interest in 2006 as a result of sanctions imposed on the Khartoum regime by the US.
|Total-Qatar joint ventures|
|Country||Joint Venture||Stake %|
|Qatar||Qatargas 1 liquefaction plant||10||65|
|Qatar||Qatargas 2 train 5||16.7||65|
|Mauritania||Exploration of Ta7 and Ta8 permits||60||20|
|Qatar||Qatar Petrochemical Company (Qapco)||20||80|
|Source: Total, Qatar Petroleum|
The talks were confirmed by a Total spokesman who said that both parties were waiting on the Sudanese partners to approve the deal.
As the operator, Total holds 32.5 per cent stake in the block. Kuwait Foreign Petroleum Exploration Company holds a 27.5 per cent share, along with state-owned Sudapet based in Khartoum and Nilepet, the South Sudan government’s energy firm, both holding 10 per cent.
Sudan has an estimated 6.7 billion barrels of proven crude oil reserves, according to UK oil major BP. In 2009, the country produced 490,000 barrels-a-day. More than 80 per cent of its remaining oil reserves are located in the south of the country.
Relations between the North and South of the country have a constant source of strain, resulting in two prolonged civil wars. A peace accord signed in 2005 saw the formation of a semi-autonomous government in the south, and the region will hold a referendum on independence in 2011. Qatar has been instrumental in easing the tension, using the Arab League meeting, held in Doha in March 2009 to address the ongoing conflict.
Total and QPI have already been working together in Mauritania since 2009, exploring two concessions in the Taoudenni Basin, alongside Algeria’s Sonatrach. According to a source close to Total, the company also held unsuccessful talks earlier in the year with QP regarding a share in the $4.5bn Yemen LNG (liquefied natural gas) project, which Total has a 39.62 per cent stake.
“Total has a huge upstream position in Yemen, to underpin a third LNG train. But they want a new partner in place to start preliminary work”, says the source.
The French oil major has a longstanding history with Qatar, both upstream and downstream. It is competing with UK-Dutch Shell Chemical to partner with QP for a planned petrochemicals plant at Ras Laffan following the departure of the US’ ExxonMobil (MEED 12:8:10).