Sudan's government is benefiting from a booming oil sector; however, despite this, it has to take difficult decisions in the near and medium term including the possibility of Southern Sudan’s secession and the question of whether or not the country should become a full member of the OPEC.

Over recent months, political relations between the north and south have become increasingly strained, with the ruling National Congress Party’s commitment to various aspects of the 2005 Comprehensive Peace Agreement apparently waning.

The Sudan People’s Liberation Movement accuses the NCP of dragging its feet on the implementation of key elements of the agreement such as security arrangements, the continued presence of northern troops in southern areas, the disarmament of militias, and crucially the protocol on the oil-rich Abyei region.

Issues surrounding the Abyei region and the Abyei boundary commission report continue to dominate political discourse; recently, for example, a bitter public dispute erupted between senior SPLM officials and the NCP following the SPLM Secretary-General Pagan Amum’s suggestion that the United States should establish temporary control of Abyei.

Because of Sudan’s pariah status and the sanctions against it, the country is limited to which countries are able to invest in it. US firms have been barred from doing business in Sudan since 1997 and this scenario is unlikely to change in the medium term with the current government in power and the genocide in Darfur. This means US oil companies especially the supermajors ExxonMobil, Chevron, and ConocoPhillips are unable to prospect for hydrocarbons in a country with potentially huge reserves of crude.

Houston-based mid-major Marathon Oil is no longer active in the country after being excluded from the new consortium in Block B. Marathon has had no involvement in Sudan’s oil sector in recent years, largely for fear of bad publicity resulting from human right abuses in the country and the genocide in Darfur. While US companies are not allowed to operate there, European companies simply choose not to, knowing that the adverse publicity that would be generated from earning profits in the pariah state would generate huge amounts of negative publicity.

This has allowed NOCs from Asia to dominate the country’s oil sector. China has the most significant interests in Sudan and has invested billions in building the oil industry up from the ground, but it has also been joined by India and Malaysia.

The Greater Nile Petroleum Oil Co, a joint venture between the China National Petroleum Corp (40percent), Malaysia’s Petronas (30percent), India’s ONGC (25percent), and national oil company Sudapet (5percent), is the key player. Sudan’s Oil Minister Awad Ahmed al-Jaz in an interview with Xinhua has said that the energy industry is the most important area of co-operation between China and Sudan. CNPC has developed eight major oilfields, has invested in the country’s main refinery in the capital, Khartoum, where it owns a 50percent stake, and has trained numerous local Sudanese employees. This has been vital for the country, producing a new class of skilled manpower able to work in the oil industry.

Last year, crude production passed the 500000-b/d mark and in July the Oil Ministry confirmed that Sudan is currently exporting around 425000b/d of crude.

Sudan has four main refineries, with a total capacity of 142000b/d. The country’s main refinery is in Khartoum and can refine 100 000 b/d; its second largest is a refinery at Port Sudan, which can manage 25000b/d. Sudan's two other refineries are located in Abu Jabra in western Sudan (2000b/d) and one in el-Obeid with a 15000-b/d capacity. Al-Jaz has announced the construction of a new refinery in the country with Malaysia’s Petronas, which will take a 50percent stake in the project, while Sudan's Ministry of Mines and Energy holds the other half.

The refinery, which will be located at Port of Sudan, initially had a capacity of 100000b/d, but it could handle 150000b/d or as much as 175000b/d.

For more information, visit www.globalinsight.com