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AFP
International oil companies gathered on Sunday to study six exploration blocks that Sudan opened for bidding ahead of talks aimed at resolving a long-running oil fee dispute with South Sudan.

More than 150 foreign and local industry representatives as well as government officials met at a Khartoum hotel to begin a process expected to conclude in May when bid winners are announced.

"We are offering six blocks with very good potential," Petroleum Minister Awad Ahmed Aljaz told the gathering, where potential bidders received an introductory briefing on each block and on Sudan's oil industry.

Sudan lost 75 percent of its oil production when South Sudan separated in July after decades of civil war ended in 2005.

The vast majority of Khartoum's export earnings came from petroleum, leaving the government scrambling for ways to bolster its finances.

"We welcome all companies from all nationalities without any strings attached," Aljaz said.

The briefing came two days before the latest talks between Sudan and South Sudan open in Addis Ababa aimed at resolving a fierce dispute over oil compensation fees.

South Sudan's top negotiator Pagan Amum said on Sunday that Juba believed its position in the negotiations had been strengthened after it inked its first deals with foreign oil companies on Friday.

The deals, which replace contracts signed with Khartoum under a unified Sudan, cover oil production in the two key petroleum states of Unity and Upper Nile in the south, where oil revenues make up 98 percent of the government budget.

Amum, head of South Sudan's ruling SPLM party, said the foreign companies would be attending as advisers in the talks with its "erratic neighbour."

He said the government of Sudan had no "legal, economic or commercial" basis to charge the south anything more than transit fees for its crude.

Although most of Sudan's oil is produced in the south, for now it can only be exported via the north, and the two countries disagree over how much Juba should pay for using the north's pipeline and export infrastructure.

Sudan's current production is 115,000 barrels a day but plans are going "full speed" to boost that by 65,000 barrels daily by year's end, said Azhari Abdalla, director general of the government's Oil Exploration and Production Authority.

Energy-hungry China is the largest foreign investor in Sudan's oil sector, and the biggest buyer of Sudanese crude.

Sudan is offering blocks bordering Egypt, in conflict-plagued Darfur, onshore and offshore along the Red Sea, and south of Khartoum and in eastern Sudan.

Abdalla said exploration -- which began offshore in the 1950s and onshore two decades later -- has proven the country has "active petroleum systems... which are substantially under-explored."

"It's interesting potential," said Gregory Channon, a director of Statesman Resources Ltd, a small firm listed on Canada's TSX Venture Exchange. "It will take several years to get discoveries out of these areas, I'm sure."

Channon said the fee dispute between Sudan and South Sudan is "a matter of negotiation" between the two sides and not relevant to the bidding for the blocks in the north.

A representative of an Asian-based oil firm, who declined to be identified, agreed Sudan "has quite (the) potential."

In November Sudanese officials announced the country will take 23 percent of the south's vital oil exports as payment in kind during the fee dispute, a move described by the south on Saturday as "blatant theft."

The United States said it was "greatly concerned by recent Sudanese public threats and unilateral actions that impede the flow of oil from South Sudan".

It urged north and south to reach agreement at the Addis Ababa talks.

Khartoum wants its neighbour to pay $36 a barrel including a "transit fee" and charges for using the marine terminal, transportation and processing.

Amum of the SPLM said the south is proposing 70 US cents a barrel.

At a news conference on Sunday, Khartoum officials said they want $7 billion in compensation, but South Sudan has offered only $5 billion.

Sabir Mohamed Hassan, Khartoum's chief negotiator on economic issues, did not say directly how much oil Sudan has confiscated nor what it is doing with the seized barrels.