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WEEKLY NEWSLETTER
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Sudan
Index
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
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