Industry sources say the Melut Basin Development Project is scheduled to reach peak output of about 180,000-200,000 barrels per day, but add that the main fields in the project are not set to start production until 2006.

Sudanese Energy and Mining Minister Awad Ahmed al-Jaz visited the area last week to inspect progress on oil installations in White Nile and Upper Nile states, said the statement, received by Reuters on Monday.

"Work on the Melut Basin Development Project is supposed to start at the end of June and exports of oil produced by the project at the end of August," it added.

It gave no estimate of production or exports from the area, which includes blocks 3 and 7.

The operator in the area is Petrodar, which is dominated by Sinopec (0386.HK) (SNP.N), Asia's largest refiner, and the Malaysian energy firm Petronas.

Sudan is a small exporter of oil, producing about 300,000 barrels per day (bpd) this year. It expects production to rise to between 500,000 and 600,000 bpd this year.

Industry sources say the Melut Basin area has proved to be a particularly successful hunting ground, with several new oil finds made last year.