• Home
  • news
    • 2006
      • Sudan now Africa's third largest oil producer

Sudan now Africa's third largest oil producer

11 October - War-ridden Sudan, which only started exporting oil in 1999, during this year has become sub-Saharan Africa's third largest oil producer, only surpassed by Nigeria and Angola. Peace between the North and South has enabled Sudan to produce around 400,000 barrels per day (bbl/d) of crude oil by now, with government plans to increase this to 600,000 bbl/d by the end of the year. With large undeveloped fields, exports are set to boom.

New statistics presented by US state agencies today indicate that Sudan already has become a bigger oil producer than Equatorial Guinea (330,000 bbl/d), Congo Brazzaville (244,000 bbl/d) and Gabon (237,000 bbl/d) - countries that have shifted on holding sub-Saharan Africa's third place among oil producers during the last decade. Only Nigeria (2.2 million bbl/d) and Angola (1.4 million bbl/d) produce more oil in sub-Saharan Africa.

Also in a North African context, Sudan's oil production is becoming significant. Algeria is estimated to have an oil production of around 2.1 million bbl/d, including condensates and natural gas plant liquids, while Libya's oil production is around 1.8 million bbl/d - both countries experiencing rapid production growth. Meanwhile, the Egyptian oil production is currently estimated at 579,000 bbl/d, being on a downwards trend since the mid-1990s. Sudan will soon surpass its northern neighbour.

By conservative estimates, Sudan's current oil production is at 382,000 bbl/d, according to figures from the US agency Energy Information Administration (EIA). In 2005, Sudan's crude oil production had averaged 363,000 bbl/d, and rapid growth was registered. It is therefore possible that the Sudanese oil production already has hit the 400,000 bbl/d threshold, sources indicate.

Numbers on Sudanese oil production always are insecure as the Khartoum government and major oil companies operating in the country avoid publicity and do not hand out complete data. Oil production in Sudan is a sensitive issue due to US sanctions against the country and "genocide complicity" allegations against oil companies involved there made by US courts.

Sudan only started producing and exporting oil in July 1999, with the completion of an export pipeline that runs from central Sudan to the Red Sea port of Bashair. North American and European companies have been strongly discouraged from taking part in Sudan's oil adventure - especially by Washington - leaving Sudan open to Chinese, Indian and Malaysian investors. China National Petroleum Corporation (CNPC), India's Oil and Natural Gas Corporation (ONGC) and Malaysia's Petronas are now the biggest players in Sudan's oil sector.

According to the 'Oil and Gas Journal', Sudan contained proven conventional reserves of 563 million barrels in January 2006, which is more than twice the proven estimates of 2001. The Sudanese Energy Ministry estimates total oil reserves at five billion barrels. Exploration efforts have so far covered only a few parts of the country.

Due to civil conflict, oil exploration has been mostly limited to the central and south-central regions of Sudan. Production is centred on the areas bordering the Khartoum-held north and the autonomous government of South Sudan, a region that finally has found peace and thus allows for stable oil production and investments at a larger level.

But the Chinese also operate larger oil fields between the regions of Kordofan and Darfur - both under Khartoum's control - which are close to the Darfur conflict area. Sudanese sources estimate that Darfur and Kordofan may be the areas richest in oil in the entire country. It is further estimated that vast potential reserves are held in the desert regions of north-western Sudan, the Blue Nile Basin, and the Red Sea area in eastern Sudan.

The expansion of the Sudanese oil production is going very quickly, with major investments flowing into the country from Hina's CNPCs. According to local sources, it is the large and controversial concession of Block 6 that is currently experiencing the largest Chinese investments. Block 6 is partly located in Darfur. During the last few months, CNPC has been able to increase the production on Block 6 from 10,000 to 40,000 bbl/d.

With the large increases on Block 6 - but also in South Sudan, where North American oil companies meanwhile are able to participate - Sudan's oil production by now probably already is at around 420,000 bbl/d. Khartoum is therefore on a steady road to reach the production target of 600,000 bbl/d it has set for the end of 2006.

Khartoum and the autonomous government of South Sudan - which have signed a revenue-sharing deal on oil production in the south - can make good use of the booming incomes. Since November 2005, oil revenues have streamed into the empty pockets of the South Sudan government, which is in the process of establishing entirely new state structures in a vast region plagued by warfare for over two decades. Revenues are to help finance rebuilding of health and education services.

Also the Khartoum government strongly needs these extra revenues, especially as Western countries increasingly have isolated Sudan. Despite sanctions against Khartoum, the country's GDP grew by 6.4 percent in 2005 and is expected to grow 5.7 percent in 2006, mainly driven by the oil industry. Currently, 70 percent of Sudan's total export revenues come from oil exports, according to EIA.

• Disclaimer