Could you give our readers an overview of what the mission and objectives of the Sudanese Petroleum Corporation are?
The Sudanese Petroleum Corporation is part of the Ministry of Energy and Mining. It's a regulatory body that handles exploration, production as well as other activities such as transportation, refining and marketing, plus normal activities as any corporation like finance and planning. When I say regulatory body I mean that this business is actually carried out by companies, either local or foreign. Presently, we have joint ventures between the government and foreign companies. In that case we represent the government interests. The Sudanese Petroleum Corporation arranges licenses of exploration. We conduct the promotion and the negotiations, and upon approval by high authorities, we sign the agreements and we sort of technically and financially supervise the operations of these companies.
There are investors from Japan, India and Indonesia who have already submitted their applications for this forthcoming licenses round. Could you give us an assessment of the situation?
We now have so many options from interested investors! With some we have already concluded what we call a Memorandum of Understanding (MOU) by which we give all the data and information to the interested parties before entering the negotiation. This was for the Russian companies, and particularly for the company called "Slavnaft" who had been given the data with respect to the middle part of Sudan, particularly Khartoum state and river Nile state. They may come in two months time to further negotiate. There is another Russian company which is interested in the Red Sea area... This will be most likely gas rather than oil. Bearing Structure, another Russian company, is expected to come in a month time for further negotiation. We have Japanese companies who are planning to come probably early June to discuss license of blocks in the north west part of Sudan, and we are waiting for them. We are now promoting the north of Sudan because most of the area in the middle, west and south are already licensed through a current agreement, some of them are already producing; some are very active in exploration, in some there is a bit of oil, but, of course, they need to develop.
Oil discoveries have been made in some blocks. When do you expect these new fields to be
operational?
The earliest of these fields would probably come late this year. And they may not come full fledge production, it might be a sort of early production systems. But I think to resume production in all these blocks would take time. It would be in the year 2003 or early 2004 to get sort of huge contribution from block 3 and 7, block 6 and block 5A in particular. Block 5B was signed on March, and we don't expect the compnay to be active in exploration before the end of the year. Our expectations is that on the year 2004 we double the level of production. 400000 bbl/day is a very modest target but in oil business you have to be very conservative.
What are your expectations as far as natural gas is concerned, and what similarities would you observe between Sudan and Egypt when dealing with gas resources?
I don't place high expectations as far as exporting natural gas. I put my hope in quantities that could be used locally for power generation and petrochemical industries in the Red Sea area. We need it for fertilizers and other petrochemicals; gas could be a medium for power generation, so whatever quantities we get, we need them locally. It's a matter of luck whether you could get very huge quantity that justify exportation, because gas export is very expensive. You have to liquify the gas, pressurize it, you must have special means of transport. So it depends on the scale: if the scale is small it is better to use it locally while we can save oil to be used in local power generation. This is the same strategy in Egypt although they are expanding the local consumption of gas at the expense of oil; they were really fortunate to discover more gas than what they really needed, so they are now targetting export.
| What future do you foresee for gas in the Sudan?
In the case of Sudan it is very early to tell. Many companies were working in the Red Sea area but they did not really pursued their studies because at the time gas was actually not required as a product, it was very cheap. Nobody wanted it, they just burnt it; they were looking for oil and they didn't find oil, but they didn't develop gas either.
What kind of gas are we talking about?
It is natural gas. We have a very light oil but that's also a signal that it is basically a gas area rather than an oil one; the technology in the seventies and eighties was not very advanced to really tell what gas reserves were. So, what we are saying now is: "let us license". If we get small or big quantities in both cases it's fine, and when the investors can not export they'll sell it to the government. Exploration history in Sudan is not very long although it started early in the late fifties. But it was only for a year or two and then it stopped for many years, so we don't have a clear view of what we have.
There are presently two refineries. Do they already meet the local demand, and what are your plans to expand the refined products?
From the two refineries we have, one is small and the production is mainly fuel oil products. The second is a big refinery, more complex; it supplies the country with all its requirements. In fact, we have a surplus of gas to export, but we know that very soon in some other products there may be some shortage. That's why we are looking at Port Sudan refinery for development so that it could backup Khartoum refinery and at the same time it could be an export refinery because it is coastal and the crude oil is just passing nearby. Instead of exporting crude oil we can use Port Sudan to refine our crude oil, complement Khartoum refinery on any growth in the future requirements and balance the rest of production for export. This project is well studied, but we are still reviewing the offers for the development of this refinery.
In fact Chinese have 50% in Khartoum refinery. Are there other investors coming from Asian countries?
For Port Sudan refinery investors are not from Asia; the project was a joint study between us and Petronas. Petronas was interested at that time but I think when we completed the study they were facing the financial crisis which affected that part of the world; they had been investing in South Africa and they also committed in Malaysia. The time was not really good for them to invest in the refinery, so they finished the work with us and that was all. We didn't want to wait
for them until they were ready, so we asked other companies to come from Europe.
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