The preliminary investigation will involve the years 1997 to 2003 regarding crimes against humanitarian law in Sudan, the office of international prosector Magnus Elving said in a statement.
"There is reason to believe that crimes have been committed and that there may be a Swedish connection with those crimes," said Elving, adding that these types of investigation are extensive and usually take a long time.
Foreign Minister Carl Bildt, who started his role in 2006, was on Lundin's board at the time.
During the time period the investigation will cover, 10,000 people were killed and nearly 200,000 fled to southern Sudan.
Sweden's national police will assist with the investigation into allegations made in a recent report -- "Unpaid Debt" -- by the European Coalition on Oil in Sudan (ECOS), an umbrella group of European organisationsm, including about 50 NGOs "working for peace and justice in Sudan."
The report, published this month, claimed Sweden's Lundin Petroleum, previously Lundin Oil, and its partners Petronas Carigali Overseas of Malaysia and OMV Exploration from Austria "may have been complicit in the commission of war crimes and crimes against humanity" in Sudan.
Sudanese troops, in collaboration with militias, attacked and displaced civilians so that Lundin Petroleum, now Lundin Oil, in consortium with Petronas and OMV, could extract oil, the report alleged.
By launching oil exploration in such an unstable region, the consortium set the wheels in motion for a power struggle that had led to numerous crimes, including widespread "killing of civilians, rape of women, abduction of children, torture and forced displacements," the report claimed.
The Swedish prosecutor's office said "the aim with the preliminary investigation is to examine whether there are individuals with links to Sweden who can be suspected of involvement in crimes."
Although not mentioned in the prosecutor's statement, Foreign Minister Bildt will likely be drawn into the inquiry.
Bildt refused through spokeswoman Irena Busic to comment on Monday regarding the launch of the investigation.
Following the publication of the ECOS report, he defended Lundin in an interview with Swedish public radio, insisting the company's actions in Sudan had "opened the way for a peace deal" in the area.
On June 11th, Bildt said that he did not see anything new in the ECOS report. He also refused to comment on the prosecutor's plans for a possible criminal investigation.
Prime Minister Fredrik Reinfeldt commented on the prosecutor's investigation to Lundin Petroleum during a visit to Västerås on Monday.
"It is important to always let the justice system do its work so that we can see what it leads to before we comment," said Reinfeldt.
Former Justice Minister Thomas Bodström demanded in a statement that Bildt take "time out." However, the foreign minister will not resign, according to the Social Democrats' spokesman.
"Since the rule of law should also apply to a minister, it is reasonable that Carl Bildt need not resign until further notice," said Bodström.
"However, it is obvious he cannot continue to represent Sweden in matters with other countries given the current situation, when he himself was on the board of a company that is now being investigated for crimes under international law."