Sudan says committed to transparency in oil revenues

August 18, 2010 (KHARTOUM) — The Sudanese government today said it is committed to transparency on oil production and revenue to local and international audience amid long-standing doubts and reports questioning the accuracy of figures provided by Khartoum.

The Sudanese oil minister Lual Deng speaking at a seminar in the Friendship Hall said that the government is keen on refuting the allegations by the UK-based Global Witness which issued a report last year which claimed to have found serious discrepancies in reports of Sudan’s oil revenues suggesting that Khartoum was underpaying the South by hundreds of millions of dollars.

Under the 2005 peace accord between North and South Sudan, both sides agreed to share the country’s oil wealth, with the south receiving half the state revenues from the oil drilled from its territory.

“We hope to comfort all the Sudanese people that there will be transparency even if there was none in the past,” said Deng, who is from the former southern rebel Sudan People’s Liberation Movement (SPLM) according to Reuters.

“The audit is basically to look at the production since 2005 — it will be done by an independent firm,” Deng said. “Our preference is to accelerate the process so that the results are made available before the referendum,” he added.

“It is the lack of transparency, or the perceived lack of transparency, that has fuelled mistrust between partners,” Agence France-Presse (AFP) quoted him as saying. “We want to enhance trust between the north and south.”

The state minister for oil Ali Ahmed Osman stressed the importance of providing facts on the Global Witness report through cooperation and coordination between the Government of National Unity (GoNU) and the Government of the South Sudan (GoSS) to inform the public on the correctness of the wealth sharing and the commitment of Global Witness to achieve transparency through its handling of the facts without distortion.

Furthermore, Azhari Abdul-Qadir Secretary General of the Ministry of Oil, described the Global Witness report as “false” emphasizing the need for tracking facts on the production and manufacture of oil in Sudan to achieve transparency.

Global Witness, which took part in the seminar, said it was impressed by the openness with which all sides participated in today’s event which also included all 3 main foreign oil companies working in Sudan (CNPC, Petronas, ONGC) saying it offered an unprecedented opportunity for cooperation and information sharing.

“It is very hard for ordinary citizens of Sudan or for civil society organisations to get accurate figures on the oil industry in the country. The figures that are publicly available do not always agree with each other. As Global Witness has previously emphasised, the discrepancies we uncovered in the oil revenue data do not necessarily mean that money is going missing. What they do mean is that there is a disclosure and verification problem and that until citizens see audited and verified data and processes they cannot be confident that the oil revenues are being openly and fairly shared” Global Witness said,

“Concerns were raised today that Global Witness had alleged that US$6billion had gone ‘missing’. This is not the case. $6bn was the full amount Global Witness estimated had been transferred from north to south since the signing of the CPA in 2005. Our analysis showed discrepancies of between 9-26% in the figures – which translates to a potential shortfall of between $540m and $1.56bn. The conservative estimate used in our report was $600m (i.e. 10%). We were careful to insist that this was only a potential shortfall – and never alleged that this money had in fact gone ‘missing’,”.

The group welcomed Deng’s promise to start publishing figures on daily output on its website and performing a full independent audit of oil production.

Global Witness said however that there are still some unanswered questions about the discrepancies and some significant gaps in information remain such as the companies’ costs of operation

“Part of the explanation tendered by CNPC to Global Witness today for production discrepancies was that companies were consuming oil in processing and transport. This could account for as much as 9% of production, it was claimed. Another explanation given by the government was that the amount of water in the oil was inflating the volume figures”.

The Sudanese oil minister also revealed that his country is working on boosting output to at least 600,000 bpd next year.

Deng said current average output is now between 450,000 and 470,000 bpd from the two blends — Nile and Dar. That could reach 650,000 bpd on the back of increased production from Block 6 and more efficient oil recovery techniques, he said.

“For next year, all things being equal, we expect between 500,000 and 600,000. We are aiming at 650,000” bpd.

The assertions by Deng contradicts a report released this month by the International Monetary Fund (IMF) stating that oil output in Sudan is projected to peak in 2012 and to subsequently decrease gradually.

About 75 per cent of Sudan’s proven reserves of 6.3bn barrels are in the south but the pipeline that carries the oil to export terminals and refineries runs through the north. The south needs Khartoum’s co-operation to sell its oil; the north needs revenues from its neighbour’s resources.

In 2011 the people of South Sudan will vote in a self determination referendum in order to decide whether they want to remain as part of united Sudan or create their own state. It is widely expected that secession will be the overwhelming choice of Southerners.

(ST)