Home | Comment & Analysis    Sunday 13 May 2007

Sudan oil industry in American figures

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By Alsir Sidahmed*

May 12, 2007 — Three figures attract the attention in the Sudan country report released by the US Energy Information Administration (EIA) late last month because of their news value.

The first regarding proven oil reserves, which is being put this time at 5 billion barrels, ten times what the same report had about Sudan’s proven reserves a year earlier.

The second and contrary to the general perception, the top recipient of Sudan oil is not China with its billions of investments in the country’s oil industry, but Japan, which on average took 124, 000 barrels per day (bpd) last year against 99, 000 bpd for China during the same period.

The third figure is that the volume of domestic consumption amounted last year to 98,000, a huge jump from the 25,000-30,000 bpd the country used to consume up to the time when it joined the club of oil exporters in August 1999.

And each has its implications.

The figure on reserves puts the American view finally in line with what is prevailing in the industry. The BP Statistical Year Book, for instance, puts Sudan oil reserves at 6.4 billion. But more important are the implications. With that amount, Sudan moves to occupy the fifth position among the top African countries in terms of reserves. High on the list is Libya, followed by Nigeria, Algeria and Angola.

More significant it becomes the top non-OPEC country in the continent with that amount of reserve after Angola joined the organization earlier this year.

The significance of this fact is that non-OPEC producers play a major role in meeting around two thirds of the market needs providing currently more than 50 million bpd leaving for OPEC the rest. But since non-OPEC producers pump usually at capacity, any of them emerges with potential to pump more will be a welcomed addition.

In addition, this fact strengthens the African option, consumers led by the United States are considering to the troublesome Gulf region, where exports could be strangled if the Straits of Hormuz, where almost two thirds of world oil trade passes, is to be blocked in a way or another.

As for the Japan being the top recipient of Sudan oil exports, it simply emphasizes the fact that Asia is the potential and future for exporters to target. More than half of OPEC production now is Asia-bound. After all it is the continent with high population growth, economic growth and before that it lacks enough oil resources to meet its needs. Indonesia, the only OPEC member from Asia, is phasing out as its production keeps dwindling each month and was not even able to meet the quota allotted to it by OPEC.

With that in mind, it is becoming obvious that Asian countries are jockeying to secure supplies, a fact that has all sorts of economic and geopolitical ramifications and is underlined by the fact that the list of Sudan top oil recipients include in addition to Japan and China, counties India, South Korea and Indonesia.

The third figure about local consumption is worrying as it implies a high rate of growth. That is understood given years of suppressed demand. But it if left unchecked it will have dire implications on all fronts, among them its erosion of exports volume. For every barrel consumed locally omes at the expense of exports.

But this should not be taken to prove what has been advocating by some people that Sudan is being targeted by the US on Darfur because of its oil resources.

After all, Sudan by all accounts is small producer and even the elevated volume of reserves amounts to the reserve of Al-Shaybah, regarded a small field in Saudi Arabia. Also the well respected Cambridge Energy Associates did not include Sudan in its list of six non-OPEC countries with great potential to impact the market in future.

More important, Sudan various governments were keen in getting American companies involved in developing the country’s hydrocarbon industry. At one point Occidental was involved in the negotiations that led finally to the establishment of Greater Nile Petroleum Co. It was then State Secretary Madeleine Albright that blocked the deal.

Sudan needs to sort out facts and fiction and work diligently to make use of its natural resources in a rational way.

* Alsir Sidahmed, a free lance journalist, media consultant and trainer could be reached at alsirsidahmed@gmail.com



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