ONGC Videsh wins $190-million arbitration awards against Sudan

ONGC Videsh

ONGC Videsh Ltd (OVL) has won $190 million arbitration awards against Sudan in a long-running dispute over payments for oil and a pipeline, a media report said.

OVL, the overseas arm of the state-owned Oil and Natural Gas Corporation (ONGC), has sent a demand notice to the Sudanese government seeking payments, the report said, adding the company hasn't gone to a court and is hoping to recover funds through diplomatic channels instead, The Economic Times cited sources as saying.

Moneycontrol could not independently verify the report.

OVL started arbitration proceedings against the Sudanese government five years ago to recover its oil and pipeline construction dues, the report said.

The Indian firm owned a 25 percent stake in the joint venture that operated blocks 2A and 4 in Sudan. CNPC of China, Petronas of Malaysia and Sudapet of Sudan were the other stakeholders.

The Sudanese government took more than its share of the oil and didn’t pay for it. Payments had been accumulating since 2011, the report said. A few years ago, OVL exited the blocks and is engaged in arbitration, ET said.

OVL initiated two arbitration proceedings to recover its oil dues. Its claim for $90 million was upheld by a UK-based tribunal, sources told ET.

In the second case, in which OVL is seeing $300 million in claims, the award has not yet been finalised. The case will be heard in July, the report said.

In a third case, OVL is also seeking payment for a pipeline it built with Oil India in the northeastern African country over 15 years ago.

A Dubai-based tribunal upheld the Indian firm’s claim of $98 million, the report said. If the interest applicable to the principal amount is upheld, further hearings would be required, the report added.

Sudan has been in dire financial straits for years and OVL would find it difficult to enforce the award. It can go to court and seek to seize the Sudanese government's assets in different countries to collect the dues, as Cairn Energy did against India in the 2021 retrospective tax case, the report said.

OVL, however, seems to be relying on diplomatic channels for this, as of now.

OVL had in 2003 picked up a stake in the Greater Nile Oil Project consisting of blocks 1, 2 and 4 located about 800 km away from the Sudanese capital Khartoum. After South Sudan became an independent country in 2011, the blocks were split between South Sudan and Sudan, the report said.