Sudan will offer six new oil blocks for development in an auction planned for early 2012, as the country attempts to compensate for the loss of producing fields in the south of the country.
Blocks 8, 12B, 14, 18, 10 and 15 will be offered, all of which are in Sudan. The winning oil firms will work in joint venture with state-owned Sudan National Petroleum Corporation (Sudapet). The Energy and Mining Ministry plans to hold a conference on 15 January to provide more details on the blocks.
“The blocks on offer are not related to South Sudan. All of them are in Sudan in areas that have not seen armed conflict and have no connection to the outstanding issues with South Sudan,” says Oil Minister Awad al-Jaz, according to local media reports.
The Sudanese government has been aiming to boost oil production since the independence of South Sudan in July this year, which saw most of the country’s oil reserves removed from its sovereignty.
According to the UK’s BP, Sudan held 6.7 billion barrels of proven oil reserves at the end of 2010, and produced about 486,000 barrels a day (b/d). The majority of its remaining reserves lie in South Sudan, at a time when it is still facing international sanctions. However, Khartoum still controls the pipeline, refining and export infrastructure from the landlocked new republic.
The two governments have struggled to agree on a price for transporting the south’s crude oil through Sudan’s pipeline network for export at Port Sudan on the Red Sea.
According to the IMF, crude oil represents 90 per cent of export earnings for Sudan and more than half the government’s revenue. The figure is even higher in South Sudan, where oil represents 98 per cent of total revenues.
The US’ Energy Information Administration reports Sudan charges the south between $23-33 a barrel to offset the loss of its 50 per cent share of the South’s revenue. South Sudan is seeking a price closer to international standards of below $1 a barrel.
According to data from state-owned Sudanese Petroleum Corporation (SPC), between 1999-2010, almost 70 per cent of Sudan’s production came from Blocks 1A,2A and 4, which produce 150,000 b/d combined. The blocks are operated by the Greater Nile Petroleum Operating Company (GNPOC), a joint venture of China National Petroleum Corporation (CNPC), Malaysia’s Petronas, India’s ONGC and Sudapet.
However, since production started at Blocks 3 and 7, production has been ramped up from about 65,000 b/d in 2006 to more than 250,000 b/d in 2010. The blocks are operated by Petrodar Operating Company, another joint venture of CNPC, Petronas, Sudapet, China’s Sinopec and Tri-Ocean Energy of Egypt.