Home | News    Wednesday 7 March 2007

Sudan sees 520,000 bpd oil output in 2007

March 6, 2007 (KHARTOUM) — Sudan estimates average oil production for 2007 will run at 520,000 barrels per day (bpd) as new fields that were delayed last year are now fully on stream, the finance minister said on Monday.

Al-Zubeir Ahmed al-Hassan told Reuters in an interview that almost a year in delays of bringing the new crude blend to market had skewed the 2006 budget, which had anticipated revenue earlier than December when cash first arrived.

Al-Zubair Ahmed al-Hassan

To mitigate the damage subsidies on local fuel consumption were cut and the government had to dip into the oil stabilisation fund, cash meant for the future of Sudan.

"This year the average will be 520,000 barrels per day," Hassan said in his Khartoum office. "The blend which is new is just being marketed (and) is a lower quality than the sweet oil of the first lot," he said.

Hassan added the actual average oil production for 2006 was only 365,000 bpd, well below the 500,000 bpd estimated at the beginning of the year.

The 2007 budget is assuming that sweeter Nile Blend will be priced at $50 a barrel, whereas the 190,000 - 200,000 bpd of new blend is assumed to earn $30 a barrel, he said.

Hassan said $5 a barrel of the target price would go to the oil stabilisation fund.

But delays in the new blend coming online last year meant the government took money from that fund.

The government in August 2006 also lowered subsidies on locally consumed petrol and diesel, which meant petrol prices rose 18 percent and diesel 11 percent, he added. This helped the budget shortfall.

Sudan, which has said it is considering joining oil cartel OPEC, has attracted Chinese, Indian and Malaysian investment in its budding oil industry as U.S. sanctions and civil wars have deterred Western companies.

Oil was one of the main reasons for a bitter north-south civil war in Africa’s largest country which ended in January 2005 with a peace deal forming an autonomous south Sudan administration and a new coalition government in Khartoum.

Under the deal the southern government is due around 50 percent of revenue from oil in the south, where Sudan’s largest fields lie.

Hassan said the southern government received just over $1.2 billion in 2006 based on the overly optimistic oil production estimate, but would receive 2.3 percent less than that in 2007.

(Reuters)