Peace with Sudan opens new vistas for India

Juba (South Sudan), March 18 (IANS) Shreedhar Vyas looks mighty pleased for a man who hadn’t had a weekend. The country manager for the overseas arm of India’s Oil and Natural Gas Corp (ONGC) breaks bread after marathon meetings here over restarting Block 5a, the oil-rich block that the company jointly operates with Petronas of Malaysia, and Nilepet, the national oil company of South Sudan.
After over a year of underemployment, it’s time now for South Sudan’s oil partners to dust maps of the Muglad region spanning some 20,900 sq km and restore the infrastructure, flattened due to bombing and vandalism by tribesmen wanting to make a fast buck in Africa’s newest and 54th nation.
The rush of getting black gold back into the pipelines, with the press giving saturated coverage, is what oil miners live for. Everyone is racing against South Sudan President Salva Kiir Mayardit’s matrix, issued last week to resolve all disputes with Sudan, from which it had broken up last year after years of conflict to form a separate country. This calls for resuming oil production by March 24.
The battle royale over transit fee between the land-locked south and its former masters in Khartoum, who control refining and evacuation into Port Sudan in the Red Sea, which had forced an outright suspension of production in Block 5a since Jan 21, 2012, ruining Juba’s budget almost irretrievably, finally seems over.
“I think we can start by the end of this month,” says Vyas. “Production will be a fraction of the 350,000 (barrels) the partners aim do in full stream across all acreages, including 5a. But all of us are eager and wanting to get there as soon as it’s technically feasible.”
ONGC Videsh Ltd (OVL), down to three executives and a part-time cook for the past six months, is quickly ramping up with dozens of field folks and the facilities to give them cover. Beijing, one can’t help but remind, has 80 companies to corner the raft of services that make ancillary money off the oil business here.
A similar rush is on for Blocks 1, 2 and 4, where OVL is in truck with Chinese giant CNPC, Petronas and Nilepet. Here, OVL’s share of production has been even more: 1.324 million metric tonnes (mmt) in 2011-12 and 1.801 mmt in 2010-11, including acreages on the northern side which must be counted because the blocks are spread over both Sudans. Production on the northern side dipped after Jan 21 last, and had to stopped after the central processing facilities in Heglig to the marine terminal were bombed heavily.
OVL has had 24.125 percent stake in Block 5a since May 2004, which it bought from Omv Austria, Petronas has 67.875 percent, while Nilepet inherited the remaining 8 percent after Sudan was divided into north and south in July 2011. ONGC’s share from the field was 0.174 mmt in 2011-12 and 0.226 mmt in 2010-11.
Even as Juba and Khartoum seem ready to move on, the history of truce being respected isn’t all that assuring. But the world is putting its might behind the matrix, brokered by the African Union. The matrix is a set of conditionalities and dates both sides must respect.
It’s an insurance against political vagaries, deep deficit budgets and starving bureaucrats and army men of their salaries. It’s a good sign that ahead of oil revenues and transit fee from Juba, Khartoum has already announced upward increases in its annual budget.
Parmod Bajaj, India’s first full-ranking ambassador to Juba, is among the growing body of optimists, who think oil will flow this time. Bajaj nuances that the first money from the sale of oil will take another three weeks after oil from Blocks 5a and Blocks 1, 2, and 4 actually reaches global buyers via Port Sudan. “So, we’re talking of the first revenues reaching around May,” he explains.
The former official in the Prime Minister’s Office (PMO), pulled into the job from the consulate in New York by Prime Minister Manmohan Singh, and P.S. Raghvan, India’s administrator of the Development Partnerships Administration (DPA), are painstakingly putting Juba higher on New Delhi’s agenda.
“This indeed is the right time for our private sector companies to enter,” Bajaj advises. While matching Beijing’s big bucks isn’t an option before DPA, the prescient OVL investment in 2003-4 has created dividends for those entering today.
For example, despite Beijing’s far deeper role in South Sudan’s reconstruction, an Indian company has been granted a concession for 20,000 hectares of land to grow sugarcane and then process it in Terekeka, Juba’s neighbouring county.
The company, Uttam Sugars, is promising to invest over Rs.1,000 crore ($180 million), an intent that’s got them some fetching coverage this weekend in the local media. “We trust them,” says Jacob Gore Samuel, commissioner of Terekeka county, mandated to broker the interests of both Uttam and the local community, which controls traditional right on the land the company needs.
India now also wants to help Juba in refurbishing a hospital of its choice. Getting doctors to a remote station entailing hopping flights via Addis Ababa remains a challenge. But New Delhi is open to committing upward of Rs.25 crore ($4.5 million) on that. Beijing, meanwhile, has already dotted downtown Juba with signage of a “China Friendship Hospital”.
But almost the entire elite of South Sudan prefers a check-up in Chennai or Noida. Suresh Gulati, an Indian medico-turned medical facilitator in Noida, is a modern-day Dr. Kotnis (the Indian doctor who is highly revered in China for his medical mission), having hosted a virtual who’s who, including the speaker of the Council of States, the deputy governor of Central Equatoria, several MPs and freedom fighters, and since the weekend, the finance minister of South Sudan.
There is a liberal financial package for treatment given by the government to those who qualify. Patients can only go up once the state’s finances improve as does the South Sudanese pound, presently in short supply in banks and commanded by road-side black marketeers.
(Rohit Bansal is chief executive and co-founder, India Strategy Group, Hammurabi and Solomon Consulting. He can be reached at [email protected] Twitter @therohitbansal)