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October 19, 2012 (KHARTOUM) – Sudan is not expected to see any jump in oil production in the next five years despite intensified efforts by Khartoum to expand exploration per figures released this week by the West’s energy watchdog.
- Sudanese Oil Minister Awad al-Jaz turns the tap to start pumping oil again from the war-damaged Heglig oil facility on May 2, 2012, 12 days after occupying South Sudanese troops left the area (Getty Images)
According to the ’Medium-Term Oil Market Report 2012’ issued by the International Energy Agency (IEA), the East African nation will produce 70,000 oil barrels per day (bpd) this year which will jump to 90,000 bpd in 2014 and drop to 60,000 in 2017.
The Paris-based agency cautioned however, that it has "deliberately" exercised caution when making projections for several oil-producing nations which included Sudan and South Sudan saying that "circumstances [there] change every week, affecting our views on both the short and medium-term supply outlook".
"Sudan and South Sudan are expected to rebound to a combined 360 kb/d [thousand barrels per day] by 2015, though still 100 kb/d [thousand barrels per day] less than 2010’s sum total, and remain broadly at these levels until 2017," reads the report.
Sudan lost approximately 75% of its oil reserves following South Sudan’s secession in mid-2011 which put the country under fiscal duress with the sharp drop in revenue and hard currency inflows that resulted from the breakup.
But the government in Khartoum hoped to offset part of the deficit through charging landlocked South Sudan for transporting its oil through the north’s infrastructure. But following disagreements on the fee that should be assessed for the service, South Sudan shut down its oil production earlier this year.
Last month a deal was struck between the two nations to resume oil exports after an understanding was reached through African mediation on the transit fees. But the remittances will still fall well below what is needed to close the budget hole.
Last July, Sudan signed oil exploration and production-sharing deals with Canadian firm Statesman Resources Ltd as well as Chinese, Nigerian, Australian, Brazilian and French companies.
Furthermore, seven blocks were awarded for the first time, while some companies joined previously awarded contracts for two other blocks.
But according to Reuters, analysts are skeptical that Sudan will increase production anytime soon as companies are expected to carry out for years magnetic studies first. Efforts to boost production from existing fields have been hampered by a scarcity of dollars needed to bring in better equipment and technology.
On Tuesday, the veteran Sudanese oil minister Awad Al-Jaz acknowledged that his country will not reach its goal of 180,000 barrels per day this year but will likely hit it in Q1 2013. He said that Sudan is currently producing 120,000 bpd but that it could rise to 150,000 bpd the end of this year.
It is not clear why a discrepancy exists between IEA figures on Sudan’s oil production compared to official ones.
"We have our blocks and we are working hard to raise production," al-Jaz told reporters at an industry conference in India according to Reuters.
The minister expressed optimism that more oil discoveries will be made in the coming years.
"We offered last month 9 blocks and had around 72 companies competing for them," Al-Jaz told Reuters.
"We signed with a number of them and some of the blocks already have discoveries of oil and gas," he added, but did not name the companies.
French explorer Maurel & Prom has signed a memorandum of understanding with Sudan for an offshore block, a government official said later. The company will review seismic data on the block and could sign a production sharing contract with Sudan in two months, the Sudanese official said.
This month, the International Monetary Fund (IMF) reclassified Sudan from an oil exporter to an oil importer to reflect the new situation resulting from the independence of South Sudan.
"Sudan....is now classified as a country with nonfuel primary products as the main source of export earnings," the IMF said.
Last April South Sudan’s army temporarily occupied the oil field of Heglig, which produced around half of to Sudan’s oil output according to government figures. The fighting caused significant damage to the infrastructure in the area and it is unknown whether full capacity oil production has been resumed there.
(ST)
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