Thursday, October 16, 2008

World Energy

Areas To Watch

Oil in the Sudan

Preface: This excerpt is from World Energy "Areas To Watch"
I would appreciate any comments on any of the material contained below.

Main Concerns: The United States imposed economic sanctions against Sudan in November 1997, prohibiting trade between the two countries, as well as investment by United States companies and persons in Sudan, in order to "deprive the regime in Khartoum of the financial and material benefits of US trade and investment, including investment in Sudan's petroleum sector." In February 2000, the Clinton administration broadened the sanctions to include a prohibition against US 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, did not apply to the foreign individual parent companies of GNPOC, which include Calgary-based Talisman Energy, Malaysia's Petronas, and the Chinese National Petroleum Corporation (CNPC). In October 2002, the US Congress passed the Sudan Peace Act, which outlines stiff sanctions, ranging from a downgrading of diplomatic relations to a UN arms embargo, that could be imposed on the Sudanese government if it negotiates in bad faith with the main southern rebel force, Sudan People's Liberation Army (SPLA).

As of January 2003, Sudan's estimated proven reserves of crude oil stood at 563.3 million barrels. Current crude oil production averages about 250,000 bbl/d, with exports of about 220,000 barrels per day. Output has been rising steadily since the completion of a vital pipeline in July 1999. 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 SPLA 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 late March 2002, SPLA rebel leader John Garang stated that his group would continue to attack oil installations in the center of the country despite an agreement to protect civilians and civilian targets and in September 2002, the SPLA said that it had destroyed the main oil well on the Heglig oil field. 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.

Sudan remains under a State of Emergency, originally declared on December 12, 1999. Despite this, security risks remain high, particularly in southern Sudan. In March 2000, Swedish company Lundin Oil was forced to suspend operations in Block 5A due to safety concerns and logistical problems associated with the construction of an access road to the site. On March 27, 2003, OMV of Austria announced that the consortium of which it is a member, along with Lundin of Sweden, Petronas of Malaysia, and Sudapet of Sudan, was renewing exploration activities in Sudan after being suspended in January 2002 due to a deteriorating security situation.

There is another article here which is quite interesting concerning the Niger Delta. Again, comments on this content as to its bias or accuracy are appreciated.

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