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New horizons level of 165,000-185,000 bpd to 300,000 bpd
Earlier this year, new possibilities began to within the next few years.
emerge. The US government offered to remove
Sudan from SSTL, on the condition that it Changing approaches
granted formal diplomatic recognition to Israel. Nevertheless, Khartoum is pinning its hopes
Sudan’s transitional regime has accepted the on new prospects in its western and southern
offer, but discussions of the deal have recently regions, as well as the offshore zone.
stalled in the US Senate, owing to disputes over Hamed Suleiman Hamed, the Undersec-
the issue of whether US victims of certain ter- retary of the Sudanese Ministry of Energy and
rorist acts will have the right to sue Khartoum Mining, claimed earlier this month that the
for compensation. country’s undeveloped oil reserves amounted
If the parties can reach agreement, though, to around 6bn barrels. He also told the Sputnik
US policy would no longer be a barrier to inter- news agency that Sudan’s natural gas reserves
national oil companies (IOCs) considering were substantial, saying: “[We] have a very large
investment in Sudan. In turn, new investors reserve of gas that has not been tapped until this
might disrupt the long-standing patterns that day.”
have allowed China to remain the top source of At the same time, Khartoum also appears to
funding for oil projects. be taking a different approach toward Beijing. It
But it might take time for this disruptive has announced that it will not renew PetroChi-
process to play out. For multiple reasons, IOCs na’s contract for Block 6, located in the Muglad
may be cautious about Sudan and unwilling to Basin in West Kordofan, when that contract
make big investments in the near term. On the expires at the end of 2020. This move may help
one hand, the country is something of a risky Sudapet reduce its costs, but it may also convince
prospect, as its political system is still in transi- the Chinese company to negotiate a new deal
tion and its economy is in poor shape. On the that is more favourable to the Sudanese side,
other hand, Sudan’s oil assets may not be overly according to an analysis published by the South
attractive right now, given that the coronavirus China Morning Post at the weekend.
(COVID-19) pandemic is still having a bearish Even so, PetroChina may not be ready to
effect on world crude prices and energy demand. renegotiate the deal just yet. It may instead opt
Moreover, its existing oil resource base to wait and see whether the US can finalise the
is less impressive than that of neighbouring deal that would see Sudan removed from SSTL
South Sudan, which ended up with 73% of all and whether IOCs rush to enter the country at
proven reserves upon partition in 2011. It is this stage of the political transition and under
currently extracting around 60,000 barrels current market conditions. If the deal between
per day of crude and hopes to boost yields Washington and Khartoum remains in limbo or
to 80,000 bpd next year, compared to South if IOCs hesitate on Sudan, Chinese investors may
Sudan’s plans to raise output from the current try to drive a harder bargain.™

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