Sudan will choose a company before August, when exports of the new grade start.

"Vitol, Trafigura and Arcadia gave their presentations. Others declined, maybe because of the difficulty of the crude," Hamed Elneel Abdel Gadeir, deputy secretary general, Ministry of Energy and Mining, Sudanese Petroleum Corp. (Sudapet), told reporters on the sidelines of an industry conference.

Heavy sweet Dar Blend crude is due to come on stream in July in the Melut basin on blocks 3 and 7, in the southeast of the country, with an initial output of 140,000 barrels per day, and reach 200,000 bpd before the end of the year.

The coming on stream of blocks 3 and 7 will almost double Sudan's output to 500,000 bpd by the end of the year.

Abdel Gadeir said Sudan's output could exceed one million bpd by 2010, with blocks 8 and 9 in the Blue Nile and Melut basins showing good potential.

"If there is peace (there will be more exploration). We have very promising fields in the south," he said at Conference Connection's High Tan Crude conference in Singapore.

"That's why I am saying production will hit one million barrels."

A peace agreement was signed in January between the government and the rebel Sudan People's Liberation Movement (SPLM), ending a 21-year old conflict in the south that has killed an estimated two million people.

But frictions persist with some rebel factions having started negotiations in the south with a number of oil companies to develop oil reserves there.

HIGH ACID CRUDE

The country's Dar Blend crude, with API gravity of 26.42, has a low sulphur content of 0.116 percent. But its high acid number of 2.4 will make marketing more difficult.

Grades with acid higher than 1 are corrosive and can only be run in refineries equipped to handle them. Such high acidity grades usually trade at discounts to other grades.

Sudan has started discussions with Malaysia's Petronas to build a new 100,000 bpd refinery that could run the new crude.

A source close to the discussions said an agreement could be signed by August and the refinery completed by end 2008.

Petronas holds a 40 percent stake in Petrodar, a consortium which also comprises China National Petroleum Corporation (CNPC) (41 pct), and Sudapet (8 pct) and which operates blocks 3 and 7.

Sudan only exports medium-heavy sweet Nile Blend for the time being, a grade popular with Chinese and Japanese refiners, and which can be directly burnt.