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North Sudan could quadruple oil output

KHARTOUM, Jan 24, 2011 – Sudan\’s oil minister said on Monday that north Sudan could nearly quadruple its crude production within three years and that French oil firm Total was set to start drilling in the south in April.

"(Oil production in the north) will be higher than in the south. They can get 500,000 barrels per day in three to four years, if they double their efforts," Lual Deng told reporters in Khartoum.

There are serious concerns in Khartoum that the looming separation of the oil-producing south, following this month\’s landmark independence referendum, will deprive the north of a vital source of income.

Deng, who is a member of the south\’s ruling Sudan People\’s Liberation Movement, said the north was currently responsible for 25 to 30 percent, or around 130,000 bpd, of the country\’s total average output of 470,000 bpd, but that new discoveries and enhanced oil recovery would boost production.

"We think the production in the north will start increasing… It will take time to develop those reserves, but the oil is there."

He added that most of the new production would come from Block 6, a block in South Kordofan that borders Darfur and currently produces around 70,000 bpd, and where there had been "very positive indications" on finding new reserves.

Deng also said that Qatar Petroleum International was in the final stage of talks with French firm Total and the other partners in the consortium that operates south Sudan\’s giant Block B, and that drilling could start in April.

Since the early 1980s, the French oil major has held the rights to Block B, a concession in Jonglei state northeast of the regional capital Juba that covers 120,000 square kilometres.

But so far it has carried out only very limited exploration due to the ravages of the devastating north-south civil war and the sanctions imposed by Washington in 1997 against dealings with Khartoum, four years after its blacklisting as a state sponsor of terrorism.

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The US-based Marathon Oil Corporation sold its stake in Block B in 2008.

"The government of southern Sudan allowed Total to bring up some proposals and they have suggested Qatar Petroleum International," Deng explained.

"Our target is to start drilling by the beginning of April," he said, adding that an agreement that saw QPI joining the consortium had to be reached before work could start.

Deng said the Qatari firm had also expressed interest in other exploration blocks in Sudan.

North Sudan is desperate to attract foreign investment and technology into its oil sector, as it battles declining production from its older fields and struggles to cope with skyrocketting food prices, weak state finances and large external debts.

An estimated 40 percent of the Khartoum government\’s income comes from oil receipts, but this could plunge if the south secedes in July, as widely expected.

The demarcation of the north-south border, where some of the Sudan\’s largest oil fields lie, and the sharing of oil revenues, currently divided around 50:50, are two of the most contentious issues currently being negotiated by the two sides.

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