Page 4 - AfrOil Week 49

AfrOil COMMENTARY AfrOil

(Image: CNPC)
Will China remain central

to Sudan’s oil sector?

The recent improvements in US-Sudanese relations may shift power away from

state-owned Chinese companies, but change is not likely to occur overnight

IN some ways, Sudan’s oil industry has changed shortages have become common, especially
dramatically over the last decade. since the toppling of Omar al-Bashir, Sudan’s
WHAT: Most of the changes are rooted in the estab- long-time president, in 2019. Earlier this year,
Sudan has declined lishment of South Sudan as an independent the interim government blamed a blockage in
to renew PetroChina’s country. In 2011, several of Sudan’s southern- the pipeline that pumps oil from South Kordo-
contract for Block 6 at the most provinces were split off to form the new fan State to a refinery in Khartoum for fuel sup-
end of the year. state. Since those provinces contained the largest ply disruptions.
and most productive oilfields, their loss led to a
WHY: significant decline in Sudan’s crude output. China: The biggest player
This move occurs against Sudan did retain control of the pipelines that But one thing has not changed – namely, China’s
a backdrop of rising were the only routes to market for South Suda- position as the biggest source of foreign invest-
debts and improvement nese crude, as well as the refineries that pro- ment in Sudan’s oil sector.
in relations with the US. cessed South Sudanese crude into fuels for the State-owned majors such as PetroChina, the
regional market. But these pipelines and refiner- main subsidiary of China National Petroleum
WHAT NEXT: ies have seen throughput drop since 2011, partly Corp. (CNPC), did not exit Sudan after 2011,
PetroChina may wait to because of civil war in South Sudan and partly even though most of the upstream assets they
see how IOCs react to
changes in Sudan before because of disputes between Khartoum and Juba were operating through joint ventures ended up
trying to negotiate a new over transit tariffs. in South Sudan. Instead, they stayed active, con-
deal. In turn, the fall in South Sudanese shipments tinuing to lead projects such as Block 6, where
has contributed to the deterioration of the PetroChina is extracting crude from fields in the
country’s oil infrastructure. Petroleum product Muglad Basin in West Kordofan State.

P4 www. NEWSBASE .com Week 49 09•December•2020