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Sudan

 
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Sudan

Petroleum Use and Domestic Resources

In 1982 roughly four-fifths of the nation's energy requirement for industry, modern agriculture, transportation, government services, and households (in addition to wood fuel, charcoal, and the like) was provided by imported petroleum and petroleum products. Approximately 10 percent of these imports were used to generate electricity. Foreign exchange costs for oil imports rose dramatically after 1973 and by 1988 amounted to almost 46 percent of earnings from merchandise exports. Dependence on external sources might lessen when the security situation permits Sudan's domestic petroleum resources to be exploited.

The search for oil began in 1959 in the Red Sea littoral and continued intermittently into the 1970s. In 1982 several oil companies were prospecting large concessions offshore and on land from the Tawkar area near the Ethiopian border to the northern part of the Red Sea Hills. No significant discoveries were reported. In 1974 Chevron, a subsidiary of Standard Oil Company of California, began exploration of a 516,000-square-kilometer concession (later reduced to 280,000 square kilometers by voluntary relinquishment) in southern and southwestern Sudan. Drilling began in 1977, and the first commercial flow was obtained in July 1979 at Abu Jabirah in southern Kurdufan Province. In 1980 major finds were made at the company's Unity Field near Bentiu in Aali an Nil Province, where further drilling by early 1981 had brought in forty-nine wells having a combined flow of more than 12,000 barrels a day. The company has estimated this field's reserves at from 80 to 100 million barrels, but exploration farther south placed the reserves at more than 250 million barrels. Other oil companies--including some from the United States, Canada, and France--have also obtained concessions, and by 1982 almost one-third of Sudan had been assigned for exploration. Oil exploration and production have been hampered, however, by the almost total lack of infrastructure and by the civil war in the south of the country. Chevron had found small aircraft and helicopters essential for transport, the latter for moving portable rigs and equipment and for general use during the rainy season when all roads and locally constructed air strips were washed out.

The domestic processing of crude petroleum began in late 1964 when the Port Sudan oil refinery went into operation. The refinery, which was financed, built, and managed by the British Petroleum and Royal Dutch Shell companies--from July 1976 as a joint equal shareholding project with the government--had a capacity of about 21,440 barrels per day. Its capacity was well in excess of Sudan's needs at the time it was built, and refined products were exported. Local demand had quintupled by 1990, well beyond the plant's capacity. As a result, more than one-third of the gas oil (used in diesel motors and for heating) and well over two-fifths of the kerosene required for domestic use had to be imported. A substantial quantity of other products refined by the plant in excess of Sudan's own needs were exported.

The domestic petroleum discoveries led to intensive discussion within the government concerning the establishment of a new refinery. Southern Sudan pressed for construction near the oilfields in the south, but it was decided finally to locate the refinery at Kusti on the White Nile about 315 kilometers south of Khartoum. In August 1981, the White Nile Petroleum Company (WNPC) was set up by the central government as a subsidiary of the Sudanese National Oil Company to handle the undertaking. The government held a two-fifths share in WNPC, Chevron Overseas Petroleum Corporation another two-fifths, and the International Finance Corporation the remaining one-fifth. Plans called for a 550-kilometer pipeline to be built from the oilfields to the new refinery. By early 1982, however, the estimated costs of the refinery and pipeline had risen to at least the equivalent of US$1 billion as against an earlier project allotment of about one-third that figure.

The Kusti refinery was predicated on production for domestic consumption. Its estimated capacity (in early 1982) of between 15,000 and 25,000 barrels a day would meet only part of Sudan's overall requirements, however, and the quality of the petroleum would restrict economic production to certain products, so the Port Sudan refinery would have to continue operating. In view of the greatly increased cost estimates of the new plant, the World Bank in 1982 undertook a study of an alternative plan that might be more attractive to foreign capital. Under this plan, the proposed pipeline would run to Port Sudan, and an extension to the existing refinery would make it possible to export surplus refined products and even earn foreign-exchange credits. Contracts were let for the construction of the pipeline, but the government canceled them in September 1986. Further seismic studies were undertaken in the swamps (As Sudd) of Aali an Nil, but all of Chevron's exploration and development activities came to an abrupt end in February 1984 when guerrillas from the southern Sudanese insurgent group known as Anya Nya II attacked the main forward Chevron base across the Bahr al Ghazal River from Bentiu, killing four Chevron employees. Chevron immediately terminated its development program and, despite repeated demands by successive Sudanese governments, has refused to return to work its concession until the safety of its personnel can be guaranteed by a settlement of the Sudanese civil war. Total, the French oil company, shut down its operations several months later.

The Nimeiri government pressured foreign oil companies to resume exploration and drilling and hoped to encourage them to do so in part by forming the National Oil Company of Sudan (NOCS) in a joint venture with Saudi Arabian entrepreneur Adnan Khashoggi. After Nimeiri was overthrown, the new government dissolved NOCS but continued to press companies to renew work. As a result, Chevron stated in late 1987 that it would begin a sixty-day, twowell drilling program in southern Kurdufan in 1988, but postponed this because of the spread of civil war. Several other foreign companies indicated an interest in petroleum exploration in 1988, following the completion of a three-year World Bank study of Sudan's hydrocarbon potential. The minister of energy and mining had announced in May 1987 that Sudan's confirmed oil reserves totaled 2 billion barrels, with an estimated 500 million barrels recoverable.

Data as of June 1991

 

Sudan - TABLE OF CONTENTS

  • The Economy

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