Exploration and Production
Exploration is still in its early stages in Sudan with only 15 to 20% of the prospective areas covered. Oil reserves in central Sudan are estimated at between 600 million and 1.2 billion barrels. Government spokesmen are quoted as saying that the higher figures are becoming increasingly more probable with the recent discoveries and successful exploration drilling in the area. Recoverable reserves for Sudan are quoted as being in excess of 800 million barrels.

History of exploration and production

Oil exploration in the Sudan began at the end of the end of the 1950s and was originally concentrated on the Red Sea continental shelf. Between 1959 and 1967 the Italian company Agip Mineraria, Oceanic Oil Company and the Sudanese company Digna Oil Company were granted concessions in the Red Sea Area. They drilled a total of seven wells and shot over 15,000 kilometres of seismics but results were disappointing. In 1974, Chevron Oil Company was awarded the southern and middle parts of the Red Sea and carried out aero-magnetic and gravity surveys. Dry gas and condensate were discovered in two wells. In 1976 Chevron discovered the Suakin gas field.

In 1979, Total Oil Company and Union Texas were each awarded concessions in the Red Sea Area with the aim of continuing the work of the previous concessionaires. Two disappointing exploration wells were drilled and in 1983, Total Oil Company relinquished its concession, Block B, in south Sudan because of the outbreak of civil war. In 1991, the Red Sea area was awarded to International Petroleum Corporation Sudan Ltd (IPC, Lundin Oil). Currently Blocks 13 and 15 are unallocated. Oil exploration in the interior basins in the south and southwest began in 1975. These basins consist of a range of intercontinental sedimentary basins trending northwest to southeast and comprise three major troughs, the Muglad Block, the Mellut Block and the Blue Nile Block.

In 1975, the Chevron Oil Company was awarded approximately 516,000 square kilometres in the Muglad and Melut Blocks and in 1979 was awarded another 73,000 square kilometres in the Blue Nile Block and the Baggara Block to the northwest of the Muglad Block. Chevron’s exploration led to a number of small to medium discoveries in southern Sudan near the towns of Bentiu, Malakal and Muglad. The discoveries included the medium sized Unity and Heglig fields located in the Upper Nile province and South Kordofan. Smaller fields include the Abu Gabra and the Sharaf Oil discoveries. In the early exploration of Sudan interior basins, Sun Oil was also active with concessions in the Khartoum, Kost, Bara, Hamara and Atbara Basins. Chevron abandoned its concessions in Sudan between 1985 and 1990 due to their location in an area where fighting was taking place between government and rebel forces. In total Chevron had drilled 28 wells in the relinquished area. The blocks containing the Unity and Heglig fields were sold to the Sudanese government.

The Sudanese government sub-divided Chevron’s concessions into smaller exploration blocks, and Canadian independent Arakis Energy (Arakis) acquired the portion of Chevron’s concession north of the town of Bentiu in 1993. Arakis began development of the Heglig and Unity fields located within its concessions, and started production on a small scale in 1996 (2,000 bpd) for local processing and consumption. The fields are remotely located and in order to develop the field effectively there was a need for a large injection of capital and Araxis could not develop the fields alone. In December 1996, the Greater Nile Petroleum Operating Company (GNPOC) was formed. This consortium comprised the China National Petroleum Corporation (CNPC, 40%), Petronas of Malaysia (30%), Sudapet (5%) and Araxis (operator and 25%). With the formation of the GNPOC, there was sufficient capital to develop the fields and to initiate a project to build a 1,500-kilometre pipeline from Heglig to the Red Sea Port of Beshair. Due to a lack of funds and the pressure of US applied sanctions, it was difficult for Arakis to continue in Sudan and in October 1998 it agreed to sell its Sudanese assets to another Canadian company, Talisman Energy.

This transaction provided much needed additional capital to fund the pipeline venture. The pipeline was started in May 1998 and came onstream with an initial capacity of 150,000 bpd in June 1999. This has rapidly been expanded to a maximum of 200,000 bpd in 2000. The GNPOC’S assets in the Greater Nile Project include three exploration and two development blocks covering 12 million acres, as well as the pipeline and terminal on the Red Sea. Lundin Oil (IPC Sudan Ltd), together with minority stakeholders, Petronas, OMV and Sudapet are exploring Block 5A and announced a significant discovery in May 1999 as well as an additional discovery in March 2001. Gulf Petroleum Corporation (GPC) of Qatar is producing 10,000 bpd from Adar field and CNPC holds the rights to Block 6 in southern Sudan.

In 1999, it was reported that TotalFinaElf was considering returning to its concession, Block B in the Bor Basin (South Sudan), which it relinquished in 1983. In September 2000, Petronas of Malaysia was awarded a 40% share in Block 5B. The work programme is planned to begin at the end of 2000. Petronas will be operator of the block and the remaining stakes are to be awarded to European companies, with TotalFinaElf being the most likely candidate. The Sudanese government has indicated that it will hold a bigger share in this project, at least 15%, compared to the 5% it holds in previous ventures. In 2000, the Sudanese government declared that it was opening up the Red Sea, Blue Nile Basin and the remote north western areas near the Libyan border for exploration. The improved export infrastructure had made the country more attractive to investors.

The fields in the Muglad area produce crude oil with a 33o to 42o API range, with only 0.5% sulfur content. The crude is highly parafinnic, which requires heating to maintain flow in the pipeline. Recoverable reserves from the Heglig and Unity fields have been estimated at 660 million to 1.2 billion barrels. The area around these two fields also is suspected to contain oil, but estimates of reserves vary. Chevron had made a rough estimate of 10 billion barrels in the early 1980’s. Talisman has cited a range of 8.5 to 12.5 billion barrels.

Shaun Bakamoso

Greetings. I'm Shaun Bakamoso, and I'm thrilled to be your guide through the dynamic world of business news in South Africa here at mbendi.co.za. With a passion for staying informed and a keen interest in the ever-evolving landscape of business, I've dedicated myself to providing you with timely, insightful, and comprehensive coverage of the latest developments impacting the South African economy. bakamoso@gmail.com / Instagram