Zeev: I read the situation regarding McLeod's dismissal differently than you. From Khan's comments, I got the impression that McLeod and the board fell out over purely internal matters (i.e., whether or not to deal more closely with the Sudan government and the other partners), issues that had nothing to do with the Lundin's. It sounded pretty obvious to me that all discussions so far between Khan and the Lundins have been superficial at best, and Khan still isn't quite in tune with what they really want.
I think the possibility of eliminating Arakis as a competitor on the exploration front is the least of the Lundin's worries. The oil & gas industry is awash with cash right now, and $50 MM is peanuts on the exploration front. IMO, the Lundin's have simply studied the geological/geophysical data from the basin very closely, so they've got a very firm grasp on the true potential of this play, and they want Arakis to _focus_ on this "huge potential" rather than continuing to mess around in Oman, Papau New Guinea, or other areas of the world.
Regarding production to date from the concession, I think Pratt said that approximately 1 MM bbls of oil has been "pre-delivered" to the Sudan government to date. In other words, payment for this oil will be reimbursed to the consortium partners from cash flows generated after the pipeline starts delivering oil. IMO, this is probably because the Sudan government lacks hard currency, and their best source of hard currency will be from sales to the export market, where transactions usually occur in USD. I suspect the hard currency issue is the reason that the other partners are "carrying" the government's interest during the development phase of the project. This is a fairly typical problem for National Oil Companies (NOC's) in lesser developed countries, where the "carried interest" is commonly used as an effective remedy. |
