Talisman Energy Inc., Calgary, has delayed until Jan. 31 the sale of its 25% interest in the Greater Nile Oil Project (GNOP) to New Delhi-based ONGC Videsh Ltd., extending the earlier date of Dec. 31, 2002.
"The delay is the result of a number of factors, including seasonal activities in various countries and complexities related to the consortium members' interests," Talisman said in a statement issued Dec. 31, 2002.
In other recent company news:
•Vancouver, BC-based Ivanhoe Energy Inc. has formed a gas-to-liquids subsidiary in Japan that will be used to "facilitate the participation of Japanese companies" in Ivanhoe's proposed GTL project in Qatar. The new subsidiary, GTL Japan Corp. (GTLJ), will be wholly owned by a unit of Ivanhoe.
•Polski Koncern Naftowy Orlen SA (PKN Orlen) signed an agreement to acquire 494 retail outlets in northern and northeastern Germany from BP PLC for 140 million euros cash, which includes assumption of debt for the stations. PKN Orlen is Poland's largest fuel manufacturer and distributor.
GNOP stake sale delayed
On Oct. 30, 2002, Talisman had entered into a definitive agreement with ONGC Videsh—the international unit of India's state-owned Oil & Natural Gas Corp.—for the $758 million sale but said that the transaction was subject to "consents from the government of Sudan and the other consortium members."
Those other consortium members include China National Petroleum Corp. International (Nile) Ltd. 40%, Malaysia's Petronas Carigali Nile Ltd. 30%, and Sudan's Sudapet Ltd. 5%.
Talisman said it remains in discussions with Sudan and other consortium members and anticipates that the sale will be completed prior to the revised Jan. 31 deadline, for the same consideration as previously announced.
Talisman acquired its operatorship and 25% interest in GNOP in October 1998 through the acquisition of Arakis Energy Corp. for about 8.9 million common shares of Talisman (OGJ, Oct. 19, 1998, p. 44). Talisman's acquisition provided an infusion of capital that enabled the consortium to complete a 930 mile pipeline to transport oil from fields in southern Sudan to an export terminal near Port Sudan on the Red Sea.
The pipeline began filling with crude in July 1999, and the first cargo of "Nile Blend" departed the export terminal in early September 1999. Originally constructed to move 150,000 b/d of oil, the pipeline has a current capacity of 250,000 b/d and can be expanded to 450,000 b/d.
Project criticism
Talisman, however, came under heavy public criticism for its work, with a Canadian government investigation concluding that oil revenues from GNOP were helping to exacerbate the country's civil war by increasing revenues for the Sudanese government. Human rights groups also argued that Talisman's involvement served to support the forced displacement of people to make way for oil exploration, and that the Sudanese government had used oil revenues for arms purchases.
Rights groups further alleged that oil production facilities themselves, especially airstrips, were used by the Sudanese military to prosecute the 19-year war against southern rebels.
All of that made the oil fields a focus of attention for the rebel Sudan People's Liberation Movement/Army (SPLM/A) which said the country's oil installations were a "legitimate military target." Even as the Sudanese government declared its intention to double oil production from the current 240,000 b/d, the SPLM/A repeatedly aimed to disrupt production or halt it completely.
In August 2001, an attempt by the SPLM/A to blow up Sudan's oil export pipeline was thwarted, but the rebels claimed to have killed 42 government soldiers in an earlier attack and to have inflicted "extensive damage" to oil facilities.
In November 2001, the SPLM/A said it ambushed an army convoy traveling near GNOP facilities, and stated that such attacks would continue until "oil exploration, exploitation, and development come to a halt."
While Talisman officials insisted their presence in Sudan was "a force for good," war over the oil fields, as well as continued claims by human rights groups, adversely affected the company's investors.
"Shareholders have told me they were tired of continually having to monitor and analyze events relating to Sudan," said Talisman president and CEO Jim Buckee when announcing the sale in October. "Selling our interest in the project resolves uncertainty about the future of this asset," he added (OGJ Online, Nov. 5, 2002).
New Ivanhoe unit
Once a contract for the Qatar GTL project is signed, Ivanhoe said, GTLJ will be assigned as much as 5% interest in the proposed project. Japanese firms will then be able to acquire equity positions in GTLJ. Ivanhoe reported that "several Japanese companies have already expressed preliminary interest" in investing. The companies' investments will then be used to fund the $150 million front-end engineering and other predevelopment studies before construction of the project begins.
"The growing demand for cleaner sources of energy in Japan and the strong interest expressed there indicate that Japanese companies would be logical candidates to participate" in the project, said David Martin, Ivanhoe chairman.
Ivanhoe's GTL project in Qatar—expected to cost $5 billion—includes the development of natural gas reserves in Qatar's huge offshore North field; the construction of a gas processing plant that will produce 78,000 b/d of condensate, 24,000 b/d of propane, and 16,000 b/d of butane; and the construction of a modular GTL plant that will produce 185,000 b/d of ultraclean naphtha and diesel fuel.
PKN Olren retail deal
BP is selling the stations to meet the German Federal Cartel Office's requirement for the British company's acquisition last year of Germany's Veba Oil AG (OGJ Online, July 16, 2001). GFCO's approval is contingent on BP selling 4% of the combined BP-Aral retail market share of 26%. The outlets being acquired by PKN Orlen equal 2.4% of this total.
PKN Olren said it was buying the stations as part of its strategy "to develop a panregional retail network and to take advantage of the opportunities represented by Poland's accession to the European Union in 2004."
The deal is expected to close Feb. 28, at which time the stations will be rebranded with the Orlen name. The company will base its German operations in Hamburg, it said.
PKN Orlen operates the largest retail station networks in Poland, the company said.