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Sudan calls for new oil sharing agreement with China

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October 12, 2016 (KHARTOUM) - Sudanese government on Wednesday has called on China to reach a new Production Sharing Agreement (PSA) on an oil field located in the southern part, as the two sides will negotiate renewal of some agreements that will expire soon.

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Workers for the China Petroleum Engineering & Construction Corp (CPECC) construct new oil facilities in Sudan. (Photograph: Trevor Snapp/Bloomberg/Getty Images)

On Wednesday, the State Minister for Oil Mahmoud Abdel-Rahman and the vesting Chinese Envoy for Arab Affairs Ambassador Lee Ching, discussed Chinese oil investments in the eastern African nation and sharing agreement on Block B2 in Heglig.

According to the official news agency SUNA, Abdel-Rahman, called on China to reach a new agreement on Block 2B to help increasing production for the interest of the two parts. he said that the oil produced by the block does not exceed 20% of the reserves.

He added his ministry seeks to resolve the outstanding issues between the two countries stressing that the "oil sector represents the strategic depth of the relationship between Sudan and China".

Block 2B is the most productive field in Heglig.

Chinese companies, which begun to work in Sudan in 1996, control 75 percent of Sudan’s oil sector.

In accordance with the PSA, the Chinese firms are awarded exploration and production activities and bear the financial risks. When they ultimately start the production they use the money from produced oil to recover capital and operational expenditures. The profit is split between the two parties.

The Chinese envoy said his country gives a special priority for investment in oil sector in Sudan.

“CNPC has reduced its investments all over the world except in Sudan, which indicates the strategic relation between the two countries,” said the Chinese envoy.

The Chinese Ambassador to Sudan, Li Lianhe, who attended the meeting said that his country encourages CNPC to increase oil production in Sudan for the interest of the two countries, pointing that the relation between the two courtiers would be developed more.

“CNPC is facing great challenges all over the world due to low oil prices,” said Lianhe, stressing that he supports the negotiation between Sudan’s oil ministry and CNPC to renew the due oil sharing agreements.

(ST)

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