With the completion of a major oil export pipeline in July 1999, Sudanese crude oil production and exports has risen rapidly over the past two years. Also, Sudan became an exporter of refined petroleum products in 2000, following the inauguration of the Khartoum Oil Refinery in June.

Note: Information contained in this report is the best available as of December 2001 and can change.

GENERAL BACKGROUND
Sudan gained its independence from Egypt and the United Kingdom in 1956. The current government, led by General Omar Hassan Ahmad al-Bashir, came to power in 1989 after overthrowing a transitional coalition government. A new constitution was promulgated on January 1, 1999. Multi-party presidential and parlimentary elections were held in December 2000, and President Bashir and his party won an overwhelming victory, tainted by a boycott by all main opposition parties.

Despite considerable natural resources, Sudan is among the world's (and region's) poorest countries. Traditionally, its economy has been mainly agricultural - a mix of subsistence farming and production of cash crops such as cotton and gum arabic. With the start of significant oil production (and exports) beginning in late 1999, however, Sudan's economy is changing dramatically, with oil export revenues now accounting for around 70% of Sudan's total export earnings. Sudan no longer relies on expensive imported oil products, which has helped the country's trade balance, while foreign investment has started to flow into the country (as of July 2001, total foreign investment stood at $7 billion). The country's currency, the dinar, has remained relatively stable since 1999, at around 257 dinars per U.S. dollar (recently it fell to 264 dinars per U.S. dollar). Sudan's economy shows signs of turning the corner after many years of poor performance.

Sudan's economic performance has been strong over the past few years. In 2000, the country's real GDP grew by 7.2%, with estimated growth of 5.5% in 2001 and forecasted growth over 5% in 2002 as well. Meanwhile, inflation has slowed dramatically over the past few years, from an average 110% between 1991 and 1996 to 16% in 1999, an estimated 6% in 2001, and a forecast 9% in 2002. Exports have grown sharply since 1999, and the merchandise trade balance has turned from negative to positive. In May 2000, the International Monetary Fund (IMF) expressed its satisfaction with Sudan's implementation of a structural reform and macroecomic stabilization program, adopted in 1997. As part of this program, Finance Minister Abdel-Rahim Hamdi -- a strong advocate of economic reform, appointed in February 2001 -- announced in July 2001 that Sudan was aiming to accelerate and broaden the country's privatization program. The government also is moving to cut costs, reduce subsidies (i.e., subsidies on gasoline and benzene were cut sharply in November 2001) and support to state-owned enterprises (SOEs), and raise revenues in order to bring the budget closer into balance.

In part due to its entry into world oil markets as an exporter, Sudan is becoming more engaged in the global economy. In February 2000, Sudan opened its Red Sea Free Trade Zone, designed to encourage foreign direct investment, and in March 2000, Sudan publicly repeated its desire to join the World Trade Organization. Since the end of 1999, Sudan has signed various trade and investment agreements with Bahrain, Egypt, Ethiopia, Iraq, Kuwait, Saudi Arabia, and Syria.

Despite its economic progress, Sudan still faces developmental obstacles, including a limited infrastructure and an external debt in 2000 of around $16 billion, representing a debt-to-GDP ratio of about 128%. Furthermore, the government remains embroiled in the long-running conflict with rebel movements in the south of the country, inhabited primarily by non-Muslims. This costly and bloody conflict has, over the past two decades, claimed (directly or indirectly through famine) as many as 2 million Sudanese lives. Finally, Sudan's new reliance on oil export revenues makes the country vulnerable to world oil price fluctuations, such as the sharp fall in oil prices since September 2001.

The United States imposed economic sanctions against Sudan in November 1997, prohibiting trade between the two countries, as well as investment by United States businesses in Sudan. At the time, Secretary of State Madeleine Albright stated that the sanctions were intended to "deprive the regime in Khartoum of the financial and material benefits of U.S. trade and investment, including investment in Sudan's petroleum sector." In February 2000, the Clinton administration broadened the sanctions to include a prohibition against U.S. citizens and companies conducting business with the Greater Nile Petroleum Operating Company (GNPOC), an international consortium of petroleum companies currently extracting oil from Sudan. The sanctions, however, do not apply to the foreign individual parent companies of GNPOC, which includes Calgary-based Talisman Energy. In October 2000, the United States continued its efforts to isolate Sudan by successfully lobbying African nations to deny Sudan a regional seat on the United Nations Security Council. Since the September 11, 2001 terrorist attacks on New York and Washington, however, U.S.-Sudanese relations appear to have improved somewhat, as the United States attempts to encourage Sudanese cooperation in the war against terrorism.

OIL
As of January 2001, Sudan's estimated proven reserves of crude oil stood at 262.1 million barrels. Crude oil production averaged 209,000 barrels per day (bbl/d) during 2001, and has been rising steadily since the completion of a vital pipeline in July 1999; oil production for 2002 is forecast to reach 219,000 bbl/d. By 2003, oil output could reach 290,000 bbl/d or higher, with plans to reach 450,000 bbl/d by 2005. In August 2001, in recognition of Sudan's growing significance as an oil exporter, OPEC granted the country observer status at OPEC meetings.

Petroleum exploration in Sudan began in the early 1960s. The activity was originally concentrated offshore in the Red Sea. The only significant offshore discovery was Chevron's Suakin gas discovery in 1976. Chevron's exploration in the 1960s and 1970s led to several oil finds in southern Sudan near the towns of Bentiu and Malakal. Chevron abandoned its concessions in Sudan in 1990, due to their location in an area where fighting was taking place between government and rebel forces. The French firm, Total, also suspended its onshore exploration activities, but retained the rights to its concessions. The Sudanese government sub-divided Chevron's concessions into smaller exploration blocks, and Canadian independent Arakis Energy (Arakis) acquired the portion of Chevron's concession north of the town of Bentiu in 1993.

Greater Nile Oil Project
Arakis began development of the Heglig and Unity fields within its concessions, and started production on a small scale (around 2,000 bbl/d) in 1996; this oil was processed and consumed within Sudan. The remote location of the field, aproximately 930 miles from the Red Sea coast, meant that it would require a very substantial capital investment to transport the oil to a seaport. To attract the necessary capital and spread the risks, Arakis entered into a consortium in December 1996 with GNPOC, consisting of the China National Petroleum Corporation (CNPC)(40%), Petronas of Malaysia (30%), Sudanese national firm Sudapet (5%), and Arakis (25%, and the field operator). Construction on the pipeline from the fields to an export terminal near Port Sudan began in May 1998 on an accelerated schedule. Originally built to move 150,000 bbl/d, the pipeline has a current capacity of 250,000 bbl/d and can be expanded to 450,000 bbl/d. Heglig and Unity reportedly produced around 220,000 bbl/d in September 2001.

Arakis' involvement in Sudan, even after the formation of the GNPOC consortium raised $700 million, remained hindered by a lack of capital. U.S. sanctions against Sudan prevented investment in the project by U.S. corporations and persons, and the high-risk nature of investment in Sudan also had an effect. In the end, Arakis agreed to be purchased by another Canadian independent, Talisman Energy, for $277 million in Talisman stock, in October 1998. The Talisman acquisition provided an infusion of capital which allowed the project to be completed on schedule in 1999. In July 1999, the pipeline began filling with crude, and the first cargo of "Nile Blend" departed the export terminal in early September 1999.

Production
The fields in the Muglad area produce crude oil with a 33^o to 42^o API range, with only 0.5% sulfur content. The crude is highly parafinnic, which requires heating to maintain flow in the pipeline. Recoverable reserves from the Heglig and Unity fields have been estimated at around 300 million barrels. The area around these two fields also is suspected to contain oil, but estimates of reserves vary. The Swedish firm, Lundin Oil (partly bought out by Talisman in June 2001), reported a discovery at the "Thar Jath 2" exploration well in the adjacent Block 5A in March 2001, with oil flows of 2,000 bbl/d. Petronas, the Austrian firm OMV, and Sudapet have minority stakes in the block. In July 2000, Petronas was awarded a 40% share in Block 5B, and in October 2000, Petronas agreed to raise Sudan's oil output by 50,000 bbl/d by mid-2002. The increased production will result from Petronas' development of two untapped oil fields in Monga and Bambo in the Mujlad Basin of western Sudan, plus the construction of three additional oil pumps along the pipeline. In March 2001, OMV announced that it had found oil at its exploratory well, "Thar Jath 1."

Sudanese officials announced in June 2000, plans to begin oil exploration in northwest Sudan, the Blue Nile Basin in southeastern Sudan, and the Red Sea area in eastern Sudan. Oil exploration in Sudan previously was limited largely to the central and south-central regions, which, according to Khartoum officials, represent only 15% of the national oil reserves. Sudanese Energy Ministry representatives place estimated total reserves in the country at 3 billion barrels and estimated proven reserves at 700 million barrels. Government spokesmen said that unnamed Japanese, European and Middle East companies had expressed interest in the new oil concessions.

In March 2000, Canada-based Fosters Resources Ltd. signed an Exploration and Production Sharing Agreement with the government of Sudan to develop, in cooperation with a consortium of Arab and Sudanese companies, the concession covering the majority of the Melut Basin in Central Sudan. One group, led by Fosters' affiliate, the Melut Petroleum Company, was granted 46% of the concession, while the other group, made up of Qatar's Gulf Petroleum Corporation (GPC) and smaller Sudanese companies, also received a 46% share. The remaining 8% is controlled by Sudapet. The concession area incorporates Adar Yeil field, where GPC is already producing 5,000 bbl/d. Fosters was forced to withdraw from the project, however, when its financial backing fell through in May 2000. Fosters cited pressure from human rights groups concerned about Sudan's human rights record as the reason for its investors' abandonment of the project. The Sudanese government signed a new production agreement for the concession in November 2000, granting GPC 46%, CNPC 23%, the Sudanese company Al Thani 23%, and Sudapet 8% (now in a consortium called Petrodar) to manage development of blocs 3 and 7 in the Melut basin.

Development of Sudan's oil resources has been highly controversial. Numerous international human rights organizations have accused the Sudanese government of financing wide-scale human rights abuses with oil revenues, including the mass displacement of civilians living near the oil fields. The Sudan People's Liberation Army (SPLA), the main southern rebel group, has declared that it considers oil installations a "legitimate military target," as oil development has provided the Sudanese government the financial resources to expand its war effort. In November 2001, southern rebels claimed to have ambushed an army convoy traveling near GNPOC facilities, and stated that such attacks would continue until "oil exploration, exploitation and development come to a halt." In August 2001, an attempt by rebels to blow up Sudan's oil export pipeline was thwarted, but rebels claimed to have killed 42 government soldiers in an attack earlier in the month, and also to have inflicted "extensive damage" to oil facilities at Heglig. The government and a representative of Talisman Energy both denied the latter claim. Rebels also claimed to have launched a successful attack on oil facilities in Bentiu in mid-October 2001, but this claim also was refuted by the government. In June 2001, Sudan's Foreign Minister (Mustafa Osman Ismail) said that the Sudanese government was prepared to share oil revenues with southern rebels if they gave up their armed struggle.

Broadened U.S. sanctions imposed against GNPOC in February reportedly had little impact on production or distribution of Sudanese oil. Talisman insisted that the corporate structure of its Sudanese oil venture effectively insulated the company's U.S. activities, thereby protecting U.S. shareholders from the penalties associated with violations of the U.S. sanctions. Despite the Canadian government's findings in February 2000 that oil revenues were exacerbating the Sudanese civil war, Canadian Foreign Minister Lloyd Axworthy declined to impose sanctions against Talisman or Sudan. As of November 2001, Talisman, which reportedly has considered selling its holdings in Sudan, appeared to be increasing oil output in the country and, in general, looking more likely to continue its operations there. In September 2001, the U.S. Congress delayed consideration of the "Sudan Peace Act," which would toughen U.S. policy towards Sudan, including imposition of possible additional sanctions on oil companies like Talisman operating in Sudan.

Refining and Downstream
With the June 2000 opening of the 50,000-bbl/d Khartoum Oil Refinery in the Jayli area, 30 miles north of Khartoum, Sudan became self-sufficient in all petroleum products except for jet fuel. The Khartoum refinery, built and jointly operated by CNPC, produces benzene and butane gas for domestic consumption and export, as well as gasoline for local consumption. A portion of the surplus gas eventually will be used in the production of electricity, according to Khartoum officials. The Khartoum refinery is expected to save the Sudanese government over $100 million per year in refined petroleum product imports. Following the opening of the Khartoum refinery, the price of gasoline was reduced considerably throughout the country and the price of gas cylinders, which Sudanese use for cooking, dropped from $5.30 to $2.60.

In August, 2000, the Sudan's National Petroleum Company (NPC) announced plans to lay pipelines to supply Eritrea and Ethiopia with petroleum derivatives from the Khartoum refinery. If approved, the pipelines would pass through Sudan's Gezira, Sennar and Gedaref states. NPC is also studying the feasibility of running another pipeline to export crude oil from the Adaryel oil fields in southern Sudan to Ethiopia. In June 2001, Sudan agreed to provide Ethiopia with 85% of its oil requirements beginning in 2002. Sudan also appears to have begun exporting oil to fellow members of COMESA (the Common Market for Eastern and Southern Africa), including another neighbor, Kenya. Under COMESA, trade within the zone is not subject to tariffs, which means that Sudanese oil likely will be cheaper for COMESA members than other alternatives. In November 2001, Sudan reportedly expressed willingness to supply Uganda with oil at a low price.

Sudan has two other refineries, with the largest in Port Sudan. The Port Sudan facility has a current capacity of 21,700 bbl/d. Sudanese officials announced in July 2000, however, plans to expand the Port Sudan capacity by 70%. A petroleum products pipeline runs from the Port Sudan refinery to Khartoum. A smaller facility located in central Sudan near El Obeid has a capacity of 10,000 bbl/d.

ELECTRICITY
Sudan currently has installed electric generation capacity of 500 megawatts (MW), managed by the state owned National Electricity Corporation (NEC). Of this, around 60% is accounted for by thermal (mainly oil) and 40% by hydropower. Hydroelectric power generation varies greatly over time, however, according to rainfall patterns. The main generating facility is the Roseires dam located on the Blue Nile approximately 500 kilometers (315 miles) southeast of Khartoum. Roseires has an installed capacity of 280 MW, but output varies greatly as water levels on the river rise and fall through the year.

Sudan's total electricity generation was 1.760 billion kilowatthours (kwh) in 1999. Two interconnected electric grids exist -- the Blue Nile grid and the Western grid. Much of Sudan, however, is not served by the electric grids, and blackouts and brownouts are common. Some towns outside the two grids are served by their own small-scale diesel-fired plants.

Faced with a power shortage, Sudan has plans to add additional generating capacity. The largest projects are the proposed Kajbar and Merowe hydroelectric facilities in northern Sudan. The Kajbar Dam, located at the Nile's second cataract, is currently under construction, and will have a 300-MW capacity. An agreement to finance the Kajbar project was signed between Sudan and China in September 1997. Under terms of the agreement, China is financing 75% of the project (approximately $200 million) and Sudan is to provide the remaining 25%. Environmental groups have expressed concern about Kajbar Dam, citing potential damage both to the Nile ecosystem and to the culture of the displaced Nubian residents of the area. The Merowe facility, if it is built, would have a capacity of 1,000 MW, and would be built at the Nile's fourth cataract. Egypt has not voiced major objections about the issue of Nile water diversion, which Sudan's hydroelectric projects would entail. In August 2001, the Merowe project received a boost when several Arab development funds (i.e., the Arab Fund for Economic and Social Development) pledged a total of $780 million to the project. In another development, in May 2001, China's Harbin Power Engineering Co. Ltd. reportedly signed a $140 million contract with Sudan to build a power plant, transmission line, and transformer station in Sudan.

On April 29, 1998, Minister of Energy and Mining al-Jaz signed two agreements with NCD of the Netherlands to develop three electric generating facilities. The facilities would have a capacity of 10 MW each. Other small electric power projects planned for Sudan include: two, 10-MW thermal units are to be built at the Khartoum oil refinery; four small diesel units are planned for eastern Sudan; and power turbines are to be installed at the Jebel Awlia Dam on the White Nile, south of Khartoum.

In other electricity-related news, the director of the NEC said in April 2001 that Sudan and Ethiopia had agreed to link their power grids. A related report in April 2001 indicated that Ethiopia had agreed to export power to Sudan (and Djibouti).

Sources for this report include: Africa Oil and Gas; Agence France Presse, CIA World Factbook 2001; CountryWatch.com; Dow Jones Interactive; Economist Intelligence Unit ViewsWire; International Market Insight Reports; International Monetary Fund; MBendi; Panafrican News Agency; Petroleum Economist; Petroleum Intelligence Weekly; Suna News Agency; U.S. Energy Information Administration; World Markets Online.

COUNTRY OVERVIEW
President: Omar Hassan Ahmad al-Bashir (since 1989)
Independence: January 1, 1956 (from Egypt and the United Kingdom)
Population (2001E): 34 million
Location/Size: Northern Africa, bordering the Red Sea between Egypt (on the north); Eritrea and Ethiopia (on the east); Kenya, Uganda and the Democratic Republic of Congo (on the south); and Libya, Chad and the Central African Republic (on the west) / 2,505,810 square kilometers (967,000 square miles), slightly larger than the combined size of Texas, New Mexico, Arizona, Nevada, California, Oregon, and Washington
Major Cities: Khartoum (capital), Juba, Kassala, Medani, Nyala, El-Obeid, Omdurman, Port Sudan
Languages: Arabic (official), Dinka, Bedawi, Nuer, Fur, Hausa, Zande, English, and various other Nilo-Saharan, and Afro-Asiatic languages
Major Ethnic Groups: Arab, Beja, Kinka, Fur, Nuba, Nubian, Nuer, Zande (Azande)
Religion: Muslim (Sunni, in north) 70%, traditional beliefs 25%, Christian 5% (mostly in south)

ECONOMIC OVERVIEW
Finance MinisterAbdel-Rahim Hamdi (since February 2001)
Currency: Sudanese dinar (SD).
Market Exchange Rate (11/24/01): US$1 = 264 SD
Gross Domestic Product (GDP) (2000E): $12.5 billion
Real GDP Growth Rate (2001E): 5.5% (2002F): 5.2%
Inflation Rate (2001E): 6.0% (2002F): 9.0%
Current Account Balance (2001E): -$0.8 billion
Major Trading Partners: Saudi Arabia, China, France, Italy, Germany, Egypt, Japan
Merchandise Exports (2001E): $1.7 billion
Merchandise Imports (2001E): $1.6 billion
Merchandise Trade Balance (2001E): $0.1 billion
Major Export Products (1999): Crude oil, sesame, livestock, cotton, gum arabic
Major Import Products (1999): Machinery and equipment, manufactured goods, oil products, transport equipment, chemicals, wheat
Total External Debt (2000E): $16.1 billion

ENERGY OVERVIEW
Minister of Mines and Energy: Awad Ahmad al-Jaz
Proven Oil Reserves (1/1/01E): 262.1 million barrels
Oil Production (2001E): 209,000 barrels per day (bbl/d) (2002F): 219,000 bbl/d
Oil Consumption (2001E): 36,000 bbl/d
Net Oil Exports (2001E): 173,000 bbl/d
Natural Gas Reserves (1/1/01E): 3 trillion cubic feet (tcf)
Natural Gas Production (1999E): None
Natural Gas Consumption (19999E): None
Electric Generation Capacity (1999E): 500 megawatts (60% thermal, 40% hydroelectric)
Electricity Generation (1999E): 1.760 billion kilowatthours (kwh)
Electricity Consumption (1999E): 1.637 billion kwh

ENVIRONMENTAL OVERVIEW
Minister of Tourism & Environment: Tagani Adam Tahir
Total Energy Consumption (1999E): 0.07 quadrillion Btu* (<0.1% of world total energy consumption)
Energy-Related Carbon Emissions (1999E): 1.2 million metric tons of carbon (<0.1% of world total carbon emissions)
Per Capita Energy Consumption (1999E): 2.3 million Btu (vs. U.S. value of 355.8 million Btu)
Per Capita Carbon Emissions (1999E): 0.04 metric tons of carbon (vs. U.S. value of 5.5 metric tons of carbon)
Energy Intensity (1997E): 5,300 Btu/$1990 (vs U.S. value of 13,900 Btu/$1990) **
Carbon Intensity (1997E): 0.09 metric tons of carbon/thousand $1990 (vs U.S. value of 0.22 metric tons/thousand $1990)**
Sectoral Share of Energy Consumption (1998E): Transportation (12.2%), Industrial (8.7%), Residential (74.0%), Commercial (5.1%)
Sectoral Share of Carbon Emissions (1998E): Transportation (65.2%), Industrial (16.9%), Residential (14.2%), Commercial (3.7%)
Fuel Share of Energy Consumption (1999E): Oil (85.6%), Natural Gas (0.0%), Coal (0.0%)
Fuel Share of Carbon Emissions (1999E): Oil (100.0%), Natural Gas (0.0%), Coal (0.0%)
Renewable Energy Consumption (1998E): 278 trillion Btu* (67% increase from 1997)
Number of People per Motor Vehicle (1998): 100 (vs. U.S. value of 1.3)
Status in Climate Change Negotiations: Non-Annex I country under the United Nations Framework Convention on Climate Change (ratified November 19th, 1993). Not a signatory to the Kyoto Protocol.
Major Environmental Issues: Inadequate supplies of potable water; wildlife populations threatened by excessive hunting; soil erosion; desertification.
Major International Environmental Agreements: A party to Conventions on Biodiversity, Climate Change, Desertification, Endangered Species, Law of the Sea, Nuclear Test Ban, Ozone Layer Protection and Whaling.

* The total energy consumption statistic includes petroleum, dry natural gas, coal, net hydro, nuclear, geothermal, solar and wind electric power. The renewable energy consumption statistic is based on International Energy Agency (IEA) data and includes hydropower, solar, wind, tide, geothermal, solid biomass and animal products, biomass gas and liquids, industrial and municipal wastes. Sectoral shares of energy consumption and carbon emissions are also based on IEA data.
**GDP based on EIA International Energy Annual 1998

OIL AND GAS INDUSTRIES
Major Oil Fields (Production - bbl/d, Sept. 2001): Heglig/Unity (200,000-220,000), Adar (10,000)
Oil Refineries (Capacity - bbl/d): Khartoum (50,000 bbl/d), El Gily (50,000 bbl/d), Port Sudan (21,700 bbl/d)
Major Foreign Oil Company Involvement: Agip, China National Petroleum Corp. (CNPC), Gulf Petroleum Corp. (GPC), Lundin Oil Corp., Exxon Mobil, National Iranian Gas Company (NIGC), OMV, Petronas, Royal Dutch/Shell, Talisman Energy, TotalFina Elf, Trafigura Beheer B.V.
 
 

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Links to other U.S. government sites:
CIA World Factbook - Sudan
U.S. State Department Travel Warning - Sudan - December 1999
U.S. State Department Statement on U.S. Sanctions Against Sudan
U.S. Department of the Treasury, Office of Foreign Assets Control, Sudan Sanctions Fact Sheet (requires Acrobat Reader)
 
 

The following links are provided solely as a service to our customers, and therefore should not be construed as advocating or reflecting any position of the Energy Information Administration (EIA) or the United States Government. In addition, EIA does not guarantee the content or accuracy of any information presented in linked sites.
MBendi Country Profile: Sudan
Africa News Service: Sudan
Washington Post World Reference: Sudan
Arab Net: Sudan
The Sudan Page
University of Pennsylvania African Studies: Sudan

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File last modified: December 17, 2001

 Contact:

 Elias Johnson
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