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Sudan's oil sector comes of age: Moin Siddiqi provides an update on what is now SSA's third-largest oil producer. Asian majors are the key investors with Sudapet in Greater Nile Petroleum Operating Co, the number-one producer.

Article Excerpt
GEOLOGICALLY SUDAN, AFRICA'S largest country (the size of Western Europe) is a vastly 'under-explored' province. The possibility of further hydrocarbons discoveries makes this country an attractive proposition for energy companies seeking new untapped frontiers.

However, Sudan's future as a major regional oil producer depends on its reintegration within the international community. Ahmed Almajzoub, Minister of State for Finance, boasted: "Sudan is virgin territory regarding the exploration of resources." Upstream oil exploration and production (E&P) - like in post-conflict Angola - holds the key to the future prosperity of the Sudanese economy, but major obstacles remain the Khartoum's government's poor image and the likelihood of UN sanctions over the humanitarian disaster in the western region of Darfur. In fact, higher investments can easily transform Sudan into a middle-ranking oil producer in the global league table on a par with Indonesia or Oman - contingent on sustained political stability and the return of Western majors.

Even under current conditions, Sudan has received more foreign direct investment (FDI) than most African countries. Total FDI inflows between 2000 and 2005 totaled US$6,844mn, making the country sub-Saharan Africa's fourth-largest FDI recipient after South Africa, Nigeria and Angola, according to UNCTAD's 2006 World Investment report.

The FDI inward stock in 2005 was US$7,850mn (28.3 per cent of GDP), compared with US$l,398mn in 2000. Foreign investment from the Asian giants is growing, especially in the petroleum industry. Moreover, future inflows will receive a powerful boost, assuming Western energy companies are allowed by their respective national governments and shareholders to re-invest in Sudan, which the Western capitals view as a 'pariah' state. The US administration's sanctions over human rights abuses in Darfur forbid US companies and others with majority US ownership from investing and buying Sudanese crudes.

Rising reserves

Exploration activity began during the late 1950s in the coastal waters of the Red Sea and Sudanese continental shelf. The lack of finance and dire security situation have capped E&P activities to a bare minimum for many decades, thereby preventing the oil sector from reaching its optimal potential to date. However, industry sources reckon that Sudan's untapped oil resources are sizeable. Estimates of proved and probable reserves range...

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