Page 7 - Downstream Monitor - MEA Week 35

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home to the upstream assets that accounted for the majority of the crude produced in Sudan prior to partition. As a result, their loss deprived Khartoum of revenue from oil export sales – and of raw materials that could be refined into fuel for domestic use.
Additionally, it made the country less attrac- tive to potential investors.
This was not just because it reduced the number of assets to which Khartoum could offer access; it was also a consequence of the fact that Sudan and its new neighbour, South Sudan, promptly began quarrelling about the terms for the use of an oil export pipeline – and later engaged in border skirmishes that caused dam- age to hydrocarbon production, transportation and storage facilities.
It remains to be seen whether the transitional regime in Khartoum can navigate all of these sensitive spots and promote economic growth while also paving the way for a profound political transformation.
In the meantime, this essay will take a brief look at what’s at stake – at the oil and gas infra- structure that Sudan still has, even after the loss of its most hydrocarbon-rich territories.
Upstream
Sudan’s upstream portfolio is less attractive than that of South Sudan.
As noted above, the latter country took pos- session of the fields that accounted for the major- ity of total production prior to partition. This left Khartoum in control of sites that not only yielded less but were also, in some cases, well past their peak.
These fields have been producing less than 100,000 bpd on average since 2011. Since they are mature, production is likely to decline fur- ther in the coming years.
As a result, they are not the most important component of Sudan’s oil and gas sector.
midstream
More crucially, the country is home to two trunk
pipelines that run from fields in the Muglad and Melut Basins to the Bashayer marine terminal, not far from Port Sudan.
One pipeline is operated by Petrodar, a group of companies helmed by China National Petro- leum Corp. (CNPC). It has a capacity of about 500,000 bpd; the other is operated by Greater Nile Petroleum Operating Co. (GNPOC), which is also led by the state-owned Chinese company. It can pump 200,000 bpd of oil through its first section, which terminates in Heglig, and 450,000 bpd through its second section, which runs from Heglig to Bashayer.
These two trunk lines handle all of the oil that Sudan produces – and all of the oil that South Sudan produces. As such, they have the poten- tial to give the former country enormous lever- age over the latter, especially since the latter is landlocked.
Downstream
Meanwhile, Sudan’s largest working oil refin- ery is located about 70km north of Khartoum. Equity in the plant is split 50:50 between CNPC and Sudan’s Ministry of Energy and Mining.
The facility has a design capacity of 100,000 barrels per day of crude, and it can process oil from fields in Sudan and South Sudan. It is capa- ble of turning out more than enough fuel to meet domestic demand in Sudan, but only if it receives adequate feedstock from both Sudanese and South Sudanese fields.
The country’s second refinery is smaller, a 21,700 bpd facility on the coast of the Red Sea in Port Sudan. Al-Bashir said before his ouster that he hoped a foreign investor would agree to build a larger oil-processing plant. In isolation, these assets are not significant enough to make Sudan a big attraction in its own right. But the country should not be overlooked either, even if it does produce less oil and has smaller reserves.
Given its connection to and geographical and logistical leverage over South Sudan, it ought to be given close attention during the political tran- sition period.™
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Week 35 05•September•2019 w w w . N E W S B A S E . c o m
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