INTERVIEW - Sudan on course to start oil exports
By Alistair Lyon
KHARTOUM, May 22 (Reuters) - Sudan has almost completed a 1,500-km pipeline from southern oil fields to the Red Sea and expects to start pumping crude to a marine terminal to meet a June 30 target, an official said on Saturday.
"All construction is completed. The pipeline is all underground and has been tested," Hassan Eltom, director general at the Energy and Mining Ministry, told Reuters.
He said testing of pumping stations should be completed within seven days.
"We hope to have oil at the marine terminal by June 30. We may start pumping at 120,000 barrels per day (bpd) and reach 150,000 bpd in a few weeks," Eltom said, adding that he expected this to rise to 200,000 bpd later.
The pipeline has a capacity of 250,000 bpd, which could be increased to 450,000 bpd with additional pumping stations.
Eltom said the first export shipment could take place from Port Sudan in late July or early August.
Initial sales would be spot or short-term contracts until the best buyers and markets had been identified, and customers had had a chance to test Sudanese crude in their refineries.
"We are still working with our partners on the mechanism of marketing the oil," Eltom said.
An international consortium is developing the $1.4 billion Greater Nile Oil Project, which includes three exploration and two development blocks covering 12 million acres, as well as the pipeline and terminal.
Canada's Talisman Energy Inc has a 25 percent stake in the project. Its partners include China National Petroleum Corp, Malaysia's state oil company Petronas and Sudan's Sudapet.
The rebel Sudan People's Liberation Army, waging a 16-year-old insurrection in the south, said last month that Talisman's oil wells were legitimate military targets.
Eltom said the threats had not disrupted work at the Unity or Heglig fields, where he said thousands of Sudanese and hundreds of expatriates were employed.
He said Sudan would at first consume most, if not all, of its production share of about 68,000 bpd. It would process 50,000 bpd at a new refinery in Khartoum due to be completed by the end the year and 15,000 at an existing refinery on the pipeline route at El Obeid southwest of the capital.
Production that had been running at 10,000 bpd, with the oil trucked to the El Obeid refinery, has been suspended until the pipeline comes into operation.
Eltom said proven, recoverable reserves now stood at about 800 million barrels, up from about 450 million estimated in September, thanks to discoveries in the Unity and Heglig fields.
Exports of Sudan's 40 percent share of the oil are likely to be marginal for the first four years, but the project will save the government the cost of imports, about $250 million a year at current oil prices.
Eltom said the government's production share would rise to 75 or 80 percent once the consortium partners have recovered their costs over four to five years.
He said Sudanese crude cost a competitive $3 to $4 to produce, including investment and operating costs.
"We are now opening doors for promotion of new areas and negotiations," he said, adding that completion of the export infrastructure had made Sudan more attractive to investors.
Sudan was likely to open up the Red Sea, Blue Nile Basin and even remote northwestern areas near the Libyan border for exploration, with bid invitations expected in the third or fourth quarter of this year, Eltom said.
"We are open for U.S. companies, but it is difficult for them to come because of sanctions," he added.
The United States has imposed economic sanctions on Sudan, accusing it of supporting international terrorism and abusing human rights. The Islamist-led government denies the charges. |
