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OVL drags Sudan to arbitration to recover $400 mn

Press Trust of India  |  New Delhi 

ONGC Videsh Ltd, India's flagship overseas investment firm, has dragged to an international arbitration court to recover over USD 400 million in unpaid dues pending since 2011.

OVL, the overseas arm of state-owned and Natural Gas Corp (ONGC), has filed an arbitration claim in a to recover about USD 300 million for oil bought from its Greater Nile Oil Project and another USD 98.94 million in unpaid pipeline rent lease, people familiar with the matter said.

OVL had in 2003 acquired 25 per cent interest in the Greater Nile Oil Project in China's CNPC holds 40 per cent stake in the project, while Malaysia's has 30 per cent and of Sudan own remaining 5 per cent.

GNOP consisted of the upstream assets of on-land Blocks 1, 2 and 4 spread over 49,500 sq km in the Muglad Basin, located about 780 km South-West of the capital city of in Sudan.

The crude oil produced from oil field of GNOP is transported through a 1,504-km pipeline to at the

Upon the secession of from Sudan in July 2011, the contract areas of Blocks 1, 2 and 4 which straddle between Sudan and was split with a major share of production and reserves are now situated in

Post-secession, as the government of Sudan's share of total production from Sudan, was not sufficient to meet requirements of local refineries, foreign firms were asked to sell their share of crude oil to it.

However, the payment of dues on account of crude oil purchased by the government of Sudan has not been received, sources said, adding that OVL's share of the outstanding dues is about USD 300 million.

OVL's share of oil production from GNOP, Sudan was 0.5-0.7 million tonnes.

The company had along with state-owned Oil Ltd constructed and financed a 741-km multi-product pipeline from refinery to for USD 194 million.

OVL's share of project cost was 90 per cent, while the rest was borne by OIL.

The pipeline was handed over to the government of Sudan in October 2005. The lump sum price, together with lease rent was required to be paid to OVL in 18 equal half yearly installments effective from December 2005.

While payment of 11 half-yearly installments due till December 2010 was received from the government of Sudan, remaining seven installments due from June 30, 2011, to June 30, 2014, is yet to be released, sources said.

OVL, whose share of investment in the project was USD 158.01 million, has been following up for the realisation of USD 98.94 million from the government of Sudan at various levels but hasn't succeeded so far.

This prompted the company to drag Sudan to arbitration, they added.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sun, May 13 2018. 10:05 IST