Sudan Oil: A qualitative move
By Alsir Sidahmed*
June 3, 2007 — The deal reached by the main partners in Sudan government, the National Congress (NC) and its counterpart Sudan People’s Liberation Movement (SPLM) on the contested oil concessions in Southern Sudan, represents the most significant development witnessed by the growing oil industry in Sudan since the country joined the club of oil exporters in August 1999.
The accord could pave the way for a more accelerated activity as far as oil exploration and production is concerned given the added technology and investments of the new western partners, the French conglomerate Total and the Swedish firm Lundin.
More important and given the new conducive atmosphere, the accord opens the way for more consolidation of the oil industry legally and in terms of security arrangements that could have more ramifications for the political and economic transformation of the country. Both White Nile and Ascom deals, reached before CPA was finalized, were shrouded into an ambiguous legal framework.
In addition and because of the civil strife, militia have played a crucial role in securing the oil industry. That role should be replaced completely by the more disciplined, state run regular army given the new fresh air of growing confidence between the NC and SPLM.
The deal allows for reputable western oil firms to make a comeback to Sudan. It was the American firm Chevron who discovered oil in Sudan back in the late 1970s, but has to leave given security and political problems. The Canadian Talisman joined the consortium of Greater Nile Petroleum Co., but was forced to sell its 25 percent stake to the Indian ONGC under the pressure of the western lobby groups in 2003 because of the ongoing war in Southern Sudan. Since then the scene was dominated by Asian oil firms notably the Chinese CNPC, the Malysian Petronas and the Indian ONGC.
Diversifying partners is as good to producers like diversifying suppliers to consumers. In both cases, it is wiser to avoid putting all eggs in one basket.
Total is not new to the scene. With its partners at the time Marathon of USA and the Kuwaitis it spent the time between 1981-85 collecting 2D seismic information that allowed it to put plans to start digging three wells in February 1985, but that was shelved because of deteriorating security at the time. With its expertise it can help tap resources in the difficult sudd area, where part of the work will be carried out under water. The deal will allow it strengthen Total’s position as the leading oil producing company in Africa and improve Sudan’s output capacity scheduled to reach 800,000 barrels per day next year.
The accord represents the concrete outcome of the operationalization of the National Petroleum Commission (NPC). Co-chaired by both President Omar El-Bashir and First Vice President Salva Kiir, it is the vehicle set up by the Comprehensive Peace Agreement (CPA) to handle oil-related issues. NPC remained dormant in effect because of disputes related to how it functions till it was cleared last November. And the recent moves allows it to intensify upstream and downstream activities to put Sudan on the world oil map at the time Africa is emerging as a new oil supplier to the market.
* Alsir Sidahmed, a free lance journalist, media consultant and trainer could be reached at [email protected]