Working for a Breakthrough
11 February, 2018
One way to handle the current economic crisis that is turning into a political one is to focus efforts with the aim of making a breakthrough in raising the country’s oil output.
Despite the fact that Sudan has lost most of its known oil reserves following the separation of South Sudan back in 2011, but clearly there is enough oil reserves to warrant some aggressive approach. The key word is “known”, yet there is enough signs of oil and gas finds in most parts of Sudan, where only some 25 percent of its land has been subjected to exploration.
A case in a point is Block-6, which was originally part of the mammoth concession given to US company Chevron back in the 1970s. Following a rebel attack on one of its camp, Chevron suspended its activities citing security concerns. That standoff continued through four regimes: the latest part of Nimeiry regime, then the transitional period led by Gen. Swar Al-Dahab and through the multi-party system led by then Prime Minister Sadig El-Mahdi up to early days when the Ingaz regime took over.
The new regime led by President Omar Al-Bashir was keen on making a breakthrough and pressured Chevron either to resume operation or its concession licence will be revoked. To buy some time, Chevron opted first as gesture to relinquish 25 percent of its concession area. The government took this area, renamed it B-6 and was given to the Chinese CNPC. Later CNPC relinquished also part of that concession area, which was renamed B-17. Both concession are currently producing and in fact B-6 seems to be one of the most promising blocks that awaits sizeable investments to realize its potential.
Additionally and years after the separation of South Sudan, some settlement has been achieved in joint operation areas. For instance part of B-3&7, which was mainly located in South Sudan, but part of it in White Nile state in Sudan. And that is what became known as Al-Rawat oil field, 80 km south-west of Kosti and is scheduled to go on-stream during this quarter. The field, which was originally slated to start pumping 2500 barrels per day (bpd) is now planned to raise its production to 7,000 bpd. Thanks to the additional discoveries that raised reserves in the field by more 66 million barrels on the top of the 90 million known proven reserves. This is yet another sign of oil reserves potential, not known before.
Along this line came the settlement of B-2(B), now belongs to Sudan and seems to be quite promising as a Swiss company has pledged to provide funding up to $200 million to bring this field on-stream.
In fact the short lived, decade-long oil bonanza on Sudan relied to a large extent on Chevron discoveries and its technical data. For reasons to do with their own strategy, the Asian companies like CNPC, Indian Oil and Gas and Malaysian Petronas decided to utilize the existing discoveries without venturing into something new. That became clear when they opted not to join into new bids for new blocks.
However, one of the significant achievements of the oil bonanza decade is that it provided a chance for Sudanese staff to have first-hand experience in various areas of the oil industry. That expertise was deployed effectively in Al-Rawat oil field resulting in more discoveries and an upgrade of engineering designs to accommodate the new discoveries.
Despite the foot dragging of Asian companies that used to work in Sudan, it is evidently clear that there are good signs of promising oil potential in Gezira, the northern west part of Sudan, in addition to natural gas in the Red Sea, but to make a breakthrough in these area there is a need for huge investments, able multinational companies with track record.
That brings the issue back to politics and the need to turn the current unilateral ceasefires into permanent ones to create a conducive environment for foreign investments. Interesting enough a number of promising oil potential areas like B-6 extend between Kordofan and Darfur states that are awaiting sustainable peace.
In addition to taking measures in this area, more is needed in terms of political will and utilizing of diplomatic relation for the sake of making a breakthrough. More important is to make use of the rich experience of the decade-long oil bonanza and see how to avoid the Dutch Disease from cropping again.
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