Following South Sudan's secession, Sudan requested transit fees of $32-36/barrel (bbl) in an attempt to make up for the oil revenue loss, while South Sudan offered a transit fee of less than $1/bbl. After nearly 15 months of intermittent negotiations, South Sudan restarted oil production in April 2013. Despite the progress that has been made to reconcile differences, several unresolved issues remain and production may be curtailed again in the future.
Oil plays a vital role in the economies of both countries. According to the International Monetary Fund (IMF), oil represented around 57 percent of Sudan's total government revenue and around 78 percent of export earnings in 2011, while it represented around 98 percent of total government revenues for South Sudan in 2011.
According to the Oil & Gas Journal (OGJ), Sudan and South Sudan have 5 billion barrels of proved crude oil reserves as of January 1, 2013. According to BP's 2013 Statistical Review, approximately 3.5 billion barrels are in South Sudan and 1.5 billion barrels are in Sudan. The majority of reserves are located in the oil-rich Muglad and Melut basins, which extend into both countries. Oil is transported through two main pipelines that stretch from the landlocked South to Port Sudan. Because of civil conflict, oil exploration prior to the 2011 independence was mostly limited to the central and south-central regions of the unified Sudan.
Natural gas associated with oil fields is mostly flared or re-injected. Despite proven reserves of 3 trillion cubic feet, gas development has been limited. In 2010, the unified Sudan flared approximately 11.8 billion cubic feet of natural gas, according to the latest data from the National Oceanic and Atmospheric Administration (NOAA), which represents about 0.2 percent of the total gas flared globally.
International oil companies (IOCs), primarily from Asia, dominate the oil sectors in both countries. They are led by CNPC, India's Oil and Natural Gas Corporation (ONGC) and Malaysia's Petronas. These companies hold large stakes in the leading consortia operating in both countries: the Greater Nile Petroleum Operating Company, the Dar Petroleum Operating Company, and the Sudd Petroleum Operating Company.
|Greater Nile Petroleum Operating Company (GNPOC)||CNPC||China||40|
|Dar Petroleum Operating Company (DPOC)||CNPC||China||41|
|Egypt Kuwait Holding||Egypt||3.6|
|Sudd Petroleum Operating Company (SPOC)||Nilepet||South Sudan||41.9375|
|Petro Energy E&P||CNPC||China||95|
|Star Oil||Ansan Wikfs||Yemen||66|
Note: * Sudapet holds a 5-percent share in GNPOC's operations in Sudan, and Nilepet holds a 5-percent share in GNPOC's operations in South Sudan. Source: Company websites, IHS Edin, and Middle East Economic Survey (MEES)
Total oil production reached its peak of 486,000 bb/d in 2010, but declined to around 453,000 bbl/d in 2011. The fall in output was driven by production declines due to maturing oil fields and lack of investment in Sudan, as well as a shortage of skilled workers in South Sudan in 2011.
In 2012, combined production from Sudan and South Sudan plummeted to around 115,000 bbl/d because South Sudan shut in all of its production at the end of January 2012
Sudan has two export pipelines that travel northbound across the country to the Bashayer (Bashair) Marine Terminal, located about 15 miles south of Port Sudan. The Petrodar pipeline transports the Dar Blend, a heavy sweet crude, from South Sudan's Blocks 3 and 7. The Dar Blend sells at a discount to the Nile Blend along with Brent, the international benchmark for the crude oil price. The pipeline stretches 850 miles, and its design (maximum) capacity is 500,000 bbl/d. It includes several heating units along its length because of the waxy, acidic nature of the crude. The Petrodar pipeline was reportedly filled with water during the time that oil production was shut down.
The GNPOC pipeline transports the Nile Blend, a medium, low-sulfur waxy crude oil, 1,000 miles from the Heglig processing facilities to the Bashayer Marine Terminal. The pipeline has a design capacity of 450,000 bbl/d. The Nile Blend is sourced from Blocks 2 (Heglig and Bamboo fields) and 4 (Diffra and Neem fields) in Sudan and Blocks 1 (Unity field) and 5A (Mala and Thar Jath fields) in South Sudan.
China imported 260,000 bbl/d from Sudan in 2011, which accounted for 5 percent of total Chinese crude imports, according to FACTS Global Energy.
ELECTRICITY GENERATION. The unified Sudan generated 8.1 billion kilowatthours (KWh) of electricity in 2010. Almost all was generated from oil (3.8 KWh) and hydroelectricity (3.8 KWh), with the remaining 6 percent from biomass and waste (0.5 KWh). Although power generation almost tripled between 2000 and 2010, millions of people are still without access to electricity. According to the latest 2009 estimates from the International Energy Agency (IEA), about 36 percent of the population had access to electricity, higher than the regional average for Sub-Saharan Africa, which was almost 31 percent. (DOE-EIA)