Home | Comment & Analysis    Thursday 9 October 2003

Sudanese energy minister denies Western firms unwilling to invest in oil sector

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BBC Monitoring Africa, Oct 09, 2003

Sudanese Energy Minister Awad Ahmad al-Jaz has denied Western companies are unwilling to invest in Sudan due to pressure from Washington. In an interview with the London-based Arabic newspaper, Al-Sharq al-Awsat, Al-Jaz said many Western companies remain engaged in Sudan’s oil sector and continued to openly bid for new concessions. The following is the text of the interview published by London-based newspaper Al-Sharq al-Awsat on 7 October; all subheadings inserted editorially

[Al-Sharq al-Awsat’s Imam Muhammad Imam] It has been observed that Western oil companies are not enthusiastic about oil investment in Sudan as a result of US pressure, which dissuades against investing in Sudan. The evidence of this is that the Canadian company Talisman sold its share to an Indian company. An Austrian company did the same thing. In the light of this, is the ministry going to approach oil companies in southeast Asia to conduct oil prospecting and investment or is there a specific plan to attract Arab and foreign investments to the oil sector in Sudan?

[Al-Jaz] I begin by addressing an invitation through Al-Sharq al- Awsat to anyone who wishes to deal with Sudan, which has great resources granted to it by Almighty God. As for your question about Western companies refraining from investment in Sudan, I would not say that this claim is 100 per cent true because every time we want to award a concession for an oil field, companies of several nationalities, including Western, Arab, Asian, and African, come to us and compete with each other to get the concession for this field. We made a pledge to ourselves that when we hold a competition, we make it free and public and in accordance with tenders and terms that are announced in advance. Therefore, we say: Let them compete with each other. It is our right afterward to review what we have received from these companies and choose the company that presents the best offer. In the last such tender, we had companies of different nationalities, which means that it is not true that [Western companies] are refraining from participating. But the company that presents the best offer takes the opportunity. Saying that the evidence of this is that the Canadian Talisman company sold its share to another is not true because it is common knowledge in the business of oil and discovery and concession for one company to replace another. This is permissible.

In our case, some companies have obtained concessions to work in some fields and then sold these concessions. In general, this does not harm us, because one company is going to replace another, and the replacement could be better. We have to choose a company that is equal to the one that left. It is true that Talisman may have been forced to leave in view of the political pressure that was exercised on it. We are sorry the company faced this pressure and had to leave. But this did not harm our country, because another company replaced it. What I want to reaffirm here is that in the last tender, we had European, Asian, Arab, and African companies, from which we chose the one that won the tender. At the end of last August, we also signed a contract with an Asian company giving it drilling concessions in two fields following a tough competition in which perhaps at least 9-10 companies competed over a single field. These companies were not from the same geographical area. Talking about companies from southeast Asia, we had companies from China, Malaysia, India, and perhaps companies from Pakistan. We also had companies from Russia and so on. There were also companies from Europe and Australia and from the Arab region. So as you see, we do not want to select a particular region. We want to announce the tender and anyone who has a desire can come to us.

Chevron, US oil policy

[Imam] Although the declared US policy opposes oil investment in Sudan, the managers and executives of US oil companies are visiting Sudan. For example, the CEO of Chevron visited Sudan last August and met with you. Is there a beginning of a relaxation in relations between these US companies and the Sudanese government or is this the outcome of the peace obligations so these companies wanted to get a share in the post-peace era?

[Al-Jaz] What I would like to assert here is that our policy has not changed in this regard. US companies had been the first to compete to carry out some transport projects, whether from the pipeline, the pumping stations, or the export port, but the boycott forced the US companies to leave, since the boycott was imposed on them by their government, which passed a law for boycotting Sudan economically. US companies were hurt by this boycott. A lot of companies of various nationalities are coming to Sudan to invest in the oil business. Therefore, we say that we, on our part, have not initiated any hostility, boycott, or estrangement. On the contrary, we invited these US companies and they came and competed with others. We were about to sign agreements with some of them, but due to the boycott that was declared by their country, these companies abandoned work in Sudan. However, they continued to visit Sudan every now and then.

We have told them that we do not have any position against any particular nationality or country, but we cannot deal with a party whose country is boycotting or besieging us. As you know, the oil industry requires frequent travels and visits, so it is not right for me to sign a contract with a company and then face pressure or lawsuits, and it is not right for business between us to remain suspended. Both of us will be harmed. Therefore, we made it clear to all those who visited us that we do not mind conducting business with them. We told them: You have to convince your country of this position. In the end, this depends on you. Some of you have worked here before and others came at a later stage. Those who spoke to us said that they had not seen in Sudan what they heard in the media. It is a stable and safe country. A person is safe in Khartoum and goes out day and night. Foreigners and others are safe in Sudan. We told them: You came to be eyewitnesses. We say that Sudan has good people. As you know, the oil industry operates day and night. Praise be to God, since we have started, the situation has been stable and secure. We told them: Tell the officials in your country about everything you have seen and heard.

[Imam] What are the major issues that the CEO of the US Chevron company raised with you?

[Al-Jaz] This is a private affair. We appreciate his visit. He highly praised Sudan and the Sudanese and spoke about the great change he saw in Sudan. He said that he did not need any information from any person because he came to Sudan and saw things first-hand. He had also visited Sudan before. During this visit, he toured Khartoum and did not find a problem in talking to the people. He volunteered to provide information as a person who came and saw things first-hand and as someone who had been here before. We told him: Say whatever you want. We did not tell him to say this or that. Describe what you saw, be it positive or negative. You are free to say whatever you want. He expressed a sincere desire to conduct business with Sudan. We told him: You are welcome, but we hope that you will convey this spirit to your government. If this estrangement and this boycott, for which we know no reason, are removed, [then you are welcome to do business with us]. All the people who came to visit us from that country were surprised - after coming and seeing the country - at what happened and why it happened. We are also surprised at what happened. Therefore, we told him: If you convince your government, then you are welcome any time to have investment with us.

[Imam] The question of guarantees is not confined to Western or US companies. All foreign companies that care about oil investment in Sudan are concerned about this issue, especially security issues and tight arrangements in this regard. This especially applies to oil companies that operate in southern Sudan. Have you given some general assurances to these companies and groups that wish to have investments, be they Arab or foreign companies or groups?

[Al-Jaz] First of all, the oil we produce is not entirely in the south. Perhaps, most of it is in the north, if we are to use such names as south and north, since oil projects are a national project. The constitution states that national projects do not recognize boundaries of a certain province, region, or state. But if this description were used, we would not say that oil is in the south, as they say. If you are talking about guarantees or assurances, God is the only guarantor. But as people testify, the companies that have been working for us since we started producing oil in Sudan have not stopped operating for a single day. This is not a theoretical testimony. These companies have been working day and night, back and forth. As you know, the oil industry will not stop for a single moment because it is continuing work. This testimony is evidence of work and that companies are operating. No damage has been done as a result of the civil war in southern Sudan. The damage was caused in the eastern region, which no one had thought about.

But despite this, oil production did not stop, even for one hour, and the damage was repaired at the time. There is no security problem. The people doing investment have overcome this. If you tour the hotels in Khartoum, you will see people of various nationalities. Not a single day passes without us meeting two, three, or four companies that wish to apply for investment, whether in the discovery of oil or in the oil services or in refining, transport, or other aspects. Therefore, the evidence of work is the presence of those people who represent companies from various nationalities. We know that there is a lot of distortion in the media, but we always maintain that anyone who wants to know Sudan and the Sudanese is welcome to come here. Any person can tour the cities, the rural areas, and meet with officials and citizens at all public sites in the public and private sectors. After that, one can form an opinion. What is said in the media does not give a true picture about us and about our country.

Oil exploration in north

[Imam] Some people are saying that the ministry has started to concentrate on the northern part of the country in its oil prospecting and exploration operations. How true is this?

[Al-Jaz] This is not true. The areas in which drilling first started in the south were one day rugged territory and there were no inhabitants there. We created development there and people settled in these areas. There was no talk about north and south or east and west. We are talking about Sudan in its well-known political and geographic borders. Therefore, in giving oil concessions, we do not force any company to work in the north or in the south. We give the companies that come to us all the available information in Sudan and they choose. We give the freedom of choice to the investor and capital holder. Therefore, we do not tell the investors to go north or south or east or west. We tell them: This is the available information and these are the fields that have not yet been given to anyone. These companies choose from them. Praise be to God, the signs that there is oil in Sudan are not confined to one geographic location. They exist in the east and west and in the centre and in the north and south, and in all other parts of Sudan. We hope that the exploitation of oil would be a reason to assert the unity and integrity of Sudan.

[Imam] Are there sufficient guarantees for investors in the energy and mining sectors in Sudan?

[Al-Jaz] The guarantor is God. Despite this, we provide military and security protection for the oil regions. We do not attack anyone, but we do not accept for anyone to attack us. We say to the sons of Sudan who carried weapons or who travelled abroad for any reason that our country is big and can accommodate us all. Our capabilities are greater than our resources and than our needs. With the emerging signs of peace, we call on everyone to work for Sudan’s progress and prosperity by utilizing its resources and energies. It would be better if we sat with each other inside our country and worked together. Therefore, the assurances and guarantees I can give is that Sudan is open to anyone who has capital. We tell this person: Please come and invest your money in our country without any restriction. As I said, God is the guarantor. But the continuation of this work and the fact that many people are coming makes us optimistic about the future. We have started to prepare the infrastructure for investment, such as means of transport and telecommunications, the banking system, and other requirements.

Security, Darfur

[Imam] With regard to the security arrangements, we know that drilling and exploration activities had begun in the Darfur region in the past period. To what extent have these operations been affected by the current disturbances in the Darfur region?

[Al-Jaz] There is no exploration in Darfur in the clear sense of the word, but if you are referring to the beginnings in this respect, then they have not been affected by the disturbances because the areas of the explorations are safe and stable.

Distribution of oil revenues

[Imam] Many people are inquiring about the arrangements initiated by your ministry to deal with the obligations of peace in the field of the distribution of wealth once peace is achieved in southern Sudan. I mean that the talk about wealth these days in Sudan refers to oil. What is your comment?

[Al-Jaz] Our comment is that Sudan had split its wealth before the discovery of oil. The south had existed before the discovery of oil. There was no difference in the living standards between the north and south or east and west. I am speaking about the situation of people since the salvation [revolution] was launched. What is in our hands is available and is known to all. Therefore, when people speak about the south, well it had existed before and it had been financed from the revenues of the Al-Jazirah project, the sugar factories, the revenues of the port, the customs duties, and the taxes. All these are revenues for the south, which received its share as part of the country. Our constitution states that the profits of national projects go to the central treasury and are then distributed. So we are talking about sharing wealth. Wealth is not oil. Wealth includes animal wealth, mineral wealth, and other resources.

We are now talking about Sudan that has federal rule. Some revenues pertain to a certain province, and that province dispenses these revenues. There are national projects whose revenues are sent to the centre and are distributed. This wealth is split among the poor provinces, the poorer provinces, the rich provinces, the richer provinces, and the central government. This is what we call budget. This budget is sent to the Council of Ministers. The council holds a session, which is attended by all the governors of the provinces and all the finance ministers of the provinces, and discusses this distribution. Once they finish discussing it at the Council of Ministers, the budget is deposited with the National Council, which represents all the deputies of Sudan. They track every penny and discuss development in the various seasons, and so on. At the end of the year, the auditor general presents a detailed report on how this money was spent through the budget that was passed by the council. The council also presents a detailed report about how the money was spent. We claim that the method by which Sudan splits its wealth and money may not exist in any other place.

We did this not out of fear of anyone. It is meant to achieve justice between our people in Sudan. Therefore, when the wealth was divided in the time of peace and there was discrepancy, the government explained this in the summary it presented. Perhaps, those experts have visited us and discussed with us what they are saying and what we have said. We think that they agreed on what we said and they said that this is almost absolute transparency. This is the expression they used in this place. Therefore, the state says that perhaps in view of the initial extraordinary circumstances, additional sums may be given to the regions that were destroyed by the war or that need reconstruction or so on. Perhaps the south and the areas that were hit by the war will be given more attention to keep up with other areas that are being developed, God willing. This is what we tell our brothers who conducted negotiations. We say that the best thing for negotiation is to drop our suspicions and doubts and theories because we are governed by the reality and by what we have in our hands. We will split what we have among us, God willing.

Gold

[Imam] What about investment in the mining sector, especially gold in eastern Sudan?

[Al-Jaz] The French government is currently working with us in this field. We have started with gold in an area in eastern Sudan. This area produces around six tonnes annually, which we split with the French government. Agreements have been signed with a number of companies in northern Sudan around the area of Barbar, which is called the region of Sanqir. We might find gold in the Nuba Mountains area. Oil was explored in northern Kordofan, and there are companies working in the copper pit area in the Darfur region. There are other minerals as well.

[Imam] Are you planning to rename the Ministry of Energy to add the word oil to the name?

[Al-Jaz] As you know, oil is part of energy. It is the mainstay. This can be done easily. For us, what matters is the substance, rather than the name. When the time comes and we think we should rename it, we will do that. But we care about substance. Production and development should continue, and this is what matters.



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