Considering its political circumstances, Sudan is making the best of a difficult situation. A peace agreement signed by the Khartoum-based government in the north and rebel groups in the south in 2005, ending Africa’s longest civil war, is just about holding together but the country is still ravaged by conflict in Darfur. The US trade embargo on the country means that US oil majors and contracting companies cannot lend their expertise to the development of Sudan’s oil sector. For other Western companies, including most of those in Europe, it is also too politically sensitive to get involved.
|Oil Reserves||6.6 billion barrels|
|Oil Production2007||457,000 barrels a day*|
|Gas Reserves||Not available|
|Gas Production 2007||Not available|
|*includes NGLs. Source: BP Statistical Review 2008|
When all of these obstacles are taken into consideration, it is surprising that Sudan’s oil sector is functioning at all. Yet it is doing so with a relative degree of success. Due largely to investment from China National Petroleum Corporation and Malaysia’s Petronas, the country produces about 500,000 b/d of oil, and the government is determined to increase this to 600,000-800,000 b/d in the coming years. The potential is there for it to do so – Sudan is considered to be one of the last sig-nificantly under-explored oil provinces in the region.
The fragile state of the north-south political accord has meant that the country’s oil sector has not been without its problems. A long-running dispute between Total and the UK’s White Nile over ownership of a share in one of the country’s largest concessions, Block B, was complicated by the fact that Khartoum supported Total’s claim, while Nilepet, the NOC set up in 2005 to represent the interests of the southern part of the country, championed White Nile. But its resolution in favour of Total – with Nilepet itself understood to have taken a share in the concession too – has shown the country’s capacity to overcome such problems.
While Khartoum-based NOC Sudapet has consistently over-estimated its ability to reach ever-higher oil production targets, there is reason to hope that oil output will continue to increase in future, assuming political stability can be maintained.
The country has a good basic pipeline infrastructure, with two major pipelines with combined capacity of about 500,000 b/d taking oil from the two main producing basins to Port Sudan in the northeast. Upgrade work could double capacity in the future.
Besides the political considerations, the country’s major weakness is the quality of its Dar blend crude, which comprises almost 50 per cent of the country’s total output. While the world’s benchmark crudes have been trading at about $130 a barrel in recent weeks, Dar fetches no more than $60-70 a barrel.
To overcome the problem, the country requires a new refinery. Unfortunately, rising contracting costs have hit Petronas’s plans for a new refinery, which now seem to have been put on hold indefinitely.