THE OIL SECTOR:
Sudan has significant proven oil reserves. The growing worldwide demand for petroleum products makes a country like Sudan with a landscape that clearly indicates its vast potential for more oil exploration - a priority target. Due to the attractive strategy of price liberalization and privatization in energy, investors are now actively involved.
Currently, intensive operations are on for oilfield development and exploration in the potential sites. Further opportunities await the country in other areas of the oil industry, including petrochemicals, transport of oil products and distribution.
Oil was first refined and distributed commercially in Sudan in 1928 by Shell, Later Mobil Oil (1953), Total (1954) and Agip (1959) set up their own downstream operations. Total sold out to Nile Petroleum (a Sudanese Company) while Agip sold out to GAPCO, a marketing company operating in some regions of Africa.
In 1976, the government of Sudan established the General Petroleum Corporation (GPC) under the umbrella of the Ministry of Energy and Mining to promote the oil industry as well as import of petroleum products for domestic consumption and crude oil refining. The oil import bill was above $ 400 million, or about 66 percent of the export earnings of Sudan.
Huge quantities of natural gas have also been discovered in the Red Sea coastal areas in the Red Sea state.
The American company Chevron began work in 1980 and discovered the Heglig Field in 1982. The initial exploration indicated reserves of an initial 200,000 barrels per day and reserves for many years.
In 1990, the government introduced a production sharing agreement in order to attract investors to develop its oil resources. The agreement granted exclusive exploration rights and included tax and foreign exchange concessions.
Areas with potential exploration have been divided into 15 blocks. Concessions are awarded by block number. The largest and most important of these blocks is in Al Muglad basin. The Unity and Heglig oil fields are on that basin situated some 800 km south west of Khartoum.
A consortium called the Greater Nile Petroleum Operating Company (GNPOC) was established to develop these fields. Parties to the consortium are the Sudan National Petroleum Corporation, the Chinese National Petroleum Corporation, Petronas of Malaysia. The consortium has pledged more than US$ 1,200 billion to develop the fields, including the construction of the 1,600-km pipeline from the fields to Bashayr terminal on the Red Sea. Production is estimated at more than 400,000 bpd over the medium term. The first shipment was dispatched in late August 1999. Part of the crude oil from the pipelines is fed to Concorp refinery south of Khartoum and Khartoum North Refinery.
Other international oil companies too have taken concessions in other blocks. There is great potential for investment and the government of Sudan is taking an extremely flexible approach towards companies willing to invest in this sector.
Business opportunities from the development of the oil sector are also considerable, including equipping of the field stations, road links, communications, supply of vehicles and catering. The growth of oil sector has also stimulated the need for power stations, roads, bridges and the development of a river transport system, communication, light industry and petrochemical industry.