The contracted drill rig, having been imported from Europe, has now arrived in Africa and is being transported to the Block Ba concession area. The Company, following extensive seismic work on the block, has identified numerous drill targets and has prioritized four where it believes the productive Muglad Basin extends into the concession area, including one large structure of over 50 sq km. The spudding of the first exploration well is targeted for early in the second quarter of 2007.
The Environmental and Social Impact Assessment ('ESIA') study to determine the environmental, social, technical and economic aspects of developing the oil potential of the concession area, including the construction of access roads, accommodation camps and eventually an oil refinery, processing plant and pipeline, is in the process of being finalized. ESF Consultants, an independent environmental management consultancy, is leading the ESIA.
The scoping phase of the ESIA has included extensive public consultation to ensure that stakeholders' contributions are taken into account within all studies and developments. Response from all the local communities has been positive. They are supportive of the development of oil within the Block Ba concession and they have an understanding that through the equity holding in White Nile by the state owned oil company of the Government of Southern Sudan, Nile Petroleum Corporation ('Nile Pet'), the people of Southern Sudan will be major beneficiaries in the development of Block Ba.
With regard to the claim made by French oil company, Total E&P Soudan SA ("Total"), regarding Block Ba, White Nile would like to take this opportunity of updating the market on the current situation, following recent press comment and speculation. Shareholders should already be aware that in mid 2005 Total made a pre-action disclosure application to the Court in London concerning a request for disclosure of documentation with regard to the title rights over Block Ba. White Nile and the Government of Southern Sudan have consistently maintained that such an issue is not a matter for which the English Courts are an appropriate venue.
However, following a Court of Appeal judgment, which has not addressed the issue of justiciability, White Nile is now required to disclose to Total ten categories of documents referred to in the Company's AIM admission document of 19 May 2005. Notwithstanding the Court of Appeal decision, both White Nile and the Government of Southern Sudan maintain that the question of the rights over the Block Ba concession area is a matter which should not be decided by the Courts in England. It should also be noted that the Court of Appeal's decision relates only to the pre-action disclosure application and no substantive proceedings have yet been instituted by Total.
As shareholders will be also aware, in the May 2005 transaction the Government of Southern Sudan, through its state owned petroleum company Nile Pet, transferred a 60% interest in Block Ba to White Nile in return for a 50% equity stake in the Company. The remaining 40% interest in the block was retained by Nile Pet.
Having finalized the interpretation of the extensive seismic data over the extension of the Muglad Basin carried out with the full support of the Government of Southern Sudan and the local communities, the Board looks forward to commencing drilling on Block Ba and assisting in expediting the development of the oil industry in Southern Sudan.
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