Sudan Enters New League As Oil Producer With Melut Basin Start-Up

The long-awaited start-up of production at Blocks 3 and 7 in Sudans Melut basin took place on 10 April with the inauguration of the pipeline to carry crude for export to Port Sudan on the Red Sea. Start-up of the project will boost the countrys production from around 330,000 b/d to 500,000 b/d. Blocks 3 and 7 offer the potential to increase Sudans output further to 650,000 b/d by the end of 2006, according to Sudanese officials lifting the country into a new league as a significant medium-sized oil producer. The revenues brought by oil exports at todays high prices could reach $8.8bn in 2006, according to the IMF (MEES , 2/9 January) money which is badly needed to rebuild the country after two decades of civil war.

The start-up of Blocks 3 and 7 had been delayed since last August due to construction problems (MEES , 6 March), and faulty foundation work on the pipeline, according to local press reports. The 32in/1,400km pipeline was opened by Minister of Energy and Mining, 'Awad al-Jaz, and will initially carry 160,000-180,000 b/d from 88 wells, said Muhammad Salih 'Uthman, the project manager. The pipeline starts at Falouj in Upper Nile state, passing through White Nile state, Khartoum state and Nile state before reaching Port Sudan. It will take 45 days to fill, and will be able to carry some 500,000 b/d, which could eventually rise to 750,000 b/d.

The pipeline and the Melut basin oilfields are operated by the Petrodar consortium, controlled by the China National Petroleum Corporation with a 41% share, and Malaysia's Petronas, with a 40% share. Smaller shares are held by state-owned Sudapet (8%), Sinopec (6%), and Al Thani of the UAE (5%). Petrodar Vice President Khidir 'Isawi said that another oilfield had been discovered in the area, which looked to contain as much oil as the existing fields. The new pipeline could also eventually pump crude from nearby Block B, he said, where Frances Total and the UKs White Nile are in dispute over exploration rights. Both companies maintain the

legitimacy of their claims and have been working to begin operations there, and it is as yet unclear how the dispute will be resolved. The National Petroleum Commission (NPC) has yet to give a formal opinion on the case.

Commitment To The South

In comments at the Melut inauguration carried by the official SUNA news agency, Mr Jaz said the government was committed to developing the necessary services and infrastructure in the war-affected areas of southern Sudan. He commended the contributions of the Chinese government and oil companies operating in Sudan, saying that CNPC had constructed a hospital, a water station, an elementary school and club in Falouj. The Governor of the Upper Nile State, Dak Dob Bishok, praised the efforts being exerted by the government with respect to develop the Southern States. But the official noises of support from Khartoum belie the ongoing tension between the north and the south First Vice President and leader of the Sudan Peoples Liberation Movement (SPLM), Salva Kiir, recently accused his northern partners of continuing to support southern militias against the SPLM.

Sudan Oil Production, 1996-2006

(000 B/D)

Year	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006
Average Production	1.8	4.8	9.8	68.6	187	210.8	240.5	271.5	343	363	600*

Source : EIA.

* Year end target, not year average.

Sudan Operating Blocks: Status At April 2006

Blocks	Operator/Ownership	Production (B/D)
1,2,4	Operator: GNPOC. Owners: CNPC (40%); Petronas (30%); ONGC (25%); Sudapet (5%).	285,000
3, 7	Operator: Petrodar (Consortium) Ownership: CNPC (41%); Petronas (40%); SINOPEC (6%); Al-Thani (5%); Sudapet (8%).	160-180,000*
5a	Operator: White Nile Petroleum Company Ownership: Petronas (68%); ONGC (24%); Sudapet (7%).	80,000
5b	Operator: Petronas. Ownership: Petronas (41%); Lundin (24.5%); ONGC (24.5%); Sudapet (10%).	-
6	Operator: CNPC Ownership: CNPC (92%); Sudapet (8%).	40,000**
8	Ownership: Petronas (77%); Sudapet (15%); Hitech (8%).	-
9	Ownership: Zafer (84%); Sudapet (16%).	-
15	Operators: CNPC (35%) & Petronas (35%). With Sudapet, Nigerias Express Petroleum, and Sudans High Tech Group. Sudans first gas PSA (MEES , 5 September 2005)	-
10-13	Free blocks	-
14	PetroSA and Sudapet signed a study agreement with OEPA in January 2005. The agreement took effect on 1 February 2005, with a first phase of 6 months, and an optional second phase of a further nine months. Current status is unclear.	-
Total		565-585,000