Sudan Is Becoming Big Exporter Of High Quality Crudes; Output To Hit 1M B/D By 2010.

Asian companies operating in Sudan are turning this country into an important exporter of high quality crude oils. The country's crude oil production is rising from 360,000 b/d now to more than 585,000 b/d in mid-2005 and to over 750,000 b/d by end-2006. It could reach or even exceed 1.15 million b/d by 2010.

Sudan's light/sweet export crude oil, the Nile Blend, is particularly popular in China, India and Malaysia. The crude oil is 33[degrees] API with a sulphur content of 0.04%. It has low metals content.

China, the world's second largest energy consumer and oil market next to the US, is pinning its hopes on the oil prospects in Sudan. This is the site of China's largest overseas oil production.

China's largest state-owned oil group, China National Petroleum Corp (CNPC), has recently started up its second group of oilfields in Sudan, to be followed by much bigger ones next year, boosting its profile in the war-torn African state, as the world's second-largest oil consumer struggles to secure supplies from all over the globe (see News Service of this week's Diplomat).

CNPC started trial production a few months ago from the Abu Gabra and Bashair oilfields at Block 6, west of the Grand Heglig and Unity fields that are located in the centre of southern Sudan, and is now pumping about 10,000 b/d. CNPC owns 95% of the company developing this block, and the Sudanese government's oil company Sudapet holds the remaining 5%. Output will reach 40,000 b/d next year and will be sent to a refinery in Khartoum for processing.

Relatively Block 6 is a small one. But the upcoming Blocks 3 and 7 fields will much larger and from these CNPC wants to export most of its production. The oilfields in Blocks 3 and 7 contain about 3,700m barrels of oil, mostly recoverable.

There are three main oil production centres in Sudan currently under development and which will enable the country to pump as much as 1.15 million b/d or more by 2010:

1. The Grand Heglig and Unity fields in the centre of southern Sudan, which are producing 350,000 b/d of the Nile Blend. The output is exported through a 1,540-kilometre pipeline to a terminal at Port Sudan on the Red Sea. The developing consortium, Greater Nile Petroleum Operating Co. (GNPOC) is owned 40% by CNPC, 30% by Petronas Carigali Overseas of Malaysia, 25% by ONGC Videsh of India which bought this stake from Talisman Energy of Canada in March 2003 for $771m, 5% by Sudapet, 5% by Gulf Petroleum, and 5% by Al-Thani Corp. of Dubai. With ONGC acting as E&P operator and CNPC operating the export pipeline, GNPOC hopes to raise its production to more than 500,000 b/d within the next two to three years.

2. Petrodar Operating Co. (POC), developing four major fields in Blocks 3 & 7 in a $1,500m project, is owned 41% by CNPC, 35% by Petronas, 8% by Sudapet, 6% by Sinopec, 5% by Gulf Petroleum and 5% by Al-Thani Corp.

The Petrodar oilfields - Palogue, Adar-Yale and Agordeed - are located about 650 kilometres to the south-east of Khartoum. They are being developed at top speed to produce 200,000 b/d from mid-2005 and 300,000 b/d by end-2006. These fields lie in the Melut Basin, a prolific area. Petrodar is having a 1,400-km crude oil export pipeline built to a Red Sea terminal near the existing one at Port Sudan.

3. El-Foula Block in western Kordofan held 100% by CNPC which is the operator for Petrodar and this tract, is being developed to produce 300,000 b/d by 2010. The block is located to the west of Grand Heglig fields and is believed to contain more than 1,000m barrels of recoverable oil. CNPC intends to have a spur line to link up with the GNPOC pipeline for export. It will also have a 730-km, 200,000 b/d pipeline from the block to the Elgaly oil refinery near Khartoum, a 70,000 b/d plant which is being expanded to 100,000 b/d as a 50-50 venture between CNPC and the government (see Downstream Trends of this week).

These three main production systems are creating the infrastructure required for blocks in remote areas to become more attractive to foreign investors. But the three Asian companies already involved are all eager to raise their E&P investments in Sudan and too aggressive to let foreign competitors take up any of the prospective areas that will be offered by the Khartoum government in the coming years.

China's No 2 state oil giant Sinopec Group farmed into the Petrodar consortium earlier this year with a 6% stake. Now Sinopec is on the look-out for additional E&P investment opportunities in Sudan.

Oil production in Sudan has risen quickly since mid-1999, when the crude oil export pipeline of GNPOC was completed. In that year, production averaged about 63,000 b/d, up from 12,000 b/d in 1998, 9,000 b/d in 1997, 5,000 b/d in 1996 and 2,000 b/d in 1995. The output rose to 174,000 b/d in 2000, 211,000 b/d in 2001, 233,000 b/d in 2002 and 255,000 b/d in 2003. By mid-2004, production had exceeded 270,000 b/d.

The Sudanese state company Sudapet holds 8%. The remaining 10% is held by Gulf Oil Petroleum and Al-Thani Corp., both involving Qatari interests.>>>OIL - As of January 2004, Sudan's estimated proven reserves of crude oil stood at 563 million barrels, more than twice the 262 million barrels estimated in 2001. As of June 2004, crude oil production was averaging about 345,000 b/d, up from 270,000 b/d during 2003.

Sudan's Energy Minister Awad Ahmad Al-Jaz, who has been in this position for many years, is very ambitious for his country. Now he is focusing on major natural gas reserves found in the 1970s by Chevron of the US, as well as on Sudan's offshore oil prospects. There are also good prospects for natural gas in the offshore areas.

Aside from Heglig and Unity, fields in the Muglad Basin produce crudes oil with a 33-to42[degrees] API range, with only 0.5% sulphur content. Most of the crudes are highly paraffinic, which require heating to maintain the flow in the pipeline.

The Muglad Basin is part of a huge Cretaceous system which extends across central Africa and includes the Doba Basin in Chad plus oilfields in southern Sudan.

In August 2001, in recognition of Sudan's growing significance as an oil exporter, OPEC granted the country an observer status at its meetings. Jaz is not particularly keen on getting Sudan to join OPEC as a member.