Sudan: Explorers Flock To New Frontier - Middle East Economic Digest, June 23
"A clearer picture of Sudan's potential will become apparent once IPC Sudan, a subsidiary of Sweden's Lundin Oil, completes tests on its Thar Jath 1 well"
International oil companies are sizing up a number of new opportunities in Sudan, following the success of the Greater Nile Petroleum Operating Company (GNPOC) in bringing on stream the Heglig and Unity fields, some 800 kilometres southwest of Khartoum.
"I know of at least 10 companies interested in acquiring new blocks," says Hassan Mohamed Ali, a Khartoum-based consultant who was involved in the Heglig scheme. He declines to identify them, other than to indicate that they come from France, Germany, Spain, Croatia and Romania.
GNPOC started pumping crude oil through a 1,600-kilometre pipeline from Heglig to the Bashair terminal on the Red Sea in August 1999. The pipeline is now transporting about 185,000 barrels a day (b/d). GNPOC pipeline manager Ralph Capeling says plans are in hand to increase capacity to 450,000 b/d through installing four new pumps. The original pumps were supplied by Weir Pumps of the UK (MEED 23:1:98).
GNPOC was set up in 1998 to develop the Heglig and Unity blocks in the Muglad basin. Its shareholders are China National Petroleum Corporation (CNPC), with 40 per cent, Petronas of Malaysia (30 per cent), Talisman Energy of Canada (25 per cent) and state-owned Sudapet (5 per cent).
A CNPC affiliate has also recently completed construction of a 50,000-b/d refinery north of Khartoum that will yield a modest surplus for export.
The government estimates the reserves in Heglig and Unity, Sudan's main producing fields, to be between 650 million-800 million barrels. Consultants such as Hassan say fresh exploration would establish much higher reserve figures for the country. "If you look at the geology of the region and the strike rates of the companies operating here, it is clear the current figures grossly underestimate the country's true potential," he says. "Only a tiny percentage of the country has been covered by seismic surveys."
A clearer picture of Sudan's potential will become apparent once IPC Sudan, a subsidiary of Sweden's Lundin Oil, completes tests on its Thar Jath 1 well in Block 5A, in the Muglad basin. Initial shows from the well have been encouraging, and the company is now planning to bring in more equipment to allow it to evaluate the find properly (MEED 3:3:00). IPC Sudan shares the block with Petronas and Austria's OMV. Sudapet holds a 5 per cent stake.
Other exploration ventures have not been so successful. CNPC is exploring Block 6, on the northern fringe of the Muglad basin, but has so far made little progress. The Chinese firm took over the block from Romania's Rompetrol that made a small discovery in the Abu Ghabra field.
East of Muglad in the Malakal area, a newly formed venture set up by Fosters Resources of Canada is preparing to start work on a $30 million drilling programme. Fosters has taken a 25 per cent stake in Melut Petroleum Company, and is seeking to increase this to 83 per cent following negotiations with the other shareholders. These are Qatari and local interests that secured the permit in 1995, taking over some operations relinquished by Chevron Corporation in 1983.
Chevron pulled out because of the war pitting the government against the southern rebel group, the Sudan People's Liberation Army (SPLA). The hazards of working in the midst of a civil war explain why it is the smaller, more adventurous companies that are now operating there. GNPOC has had to contend with a number of attacks on its pipeline by pro-SPLA militias, and its whole enterprise could be threatened if the SPLA continues its recent advance in Kassala province, which lies just south of Port Sudan.
GNPOC's Canadian partner Talisman has also had to fend off attacks by the US administration, which has accused the company of complicity in human rights abuses and of fanning the flames of the conflict by giving oil export royalties to the government. The Canadian government issued a report in February criticising Talisman, but stopping short of imposing sanctions. Talisman is now seeking to gain some of the moral high ground by supporting aid efforts for people displaced from the oil producing areas.
For companies considering involvement in Sudan, there is also the question of what might happen if the civil war should end. "Many of Sudan's best oil fields are in the south," says a Western diplomat in Khartoum. "If the country splits into two as a result of a referendum on independence, the companies drilling in those fields will lose their concessions and have to negotiate all over again." |
