Sudan Coup Puts Oil Plans in Disarray

The collapse of the regime of former Sudanese President Omar al-Bashir is likely to jolt the country's oil sector and could leave in disarray earlier approved plans to open up the country's offshore blocks in the Red Sea basin for exploration by more credible and well resourced international oil companies.

Bashir, who has been indicted by the International Criminal Court for crimes against humanity, was forced by his own military to end his 30-year iron fist-rule on April 11 after months of anti-government protests sparked by the country's worsening economic downturn and increasing abuse of human rights by government agents.

The raging crisis could complicate matters for the oil sector in Sudan at a time when the country was still grappling with the reality of losing between 50% and 75% of its oil revenues after the 2011 secession of South Sudan and the impact of the economic sanctions imposed by the US after Bashir openly threw lots with Iraq during the 1990s war on terror.

“For the last seven or so years since the secession of South Sudan it has been really difficult for the economy of the country (Sudan),” said Ashari Abdalla Abdelgader, the Minister of Petroleum & Gas on the sidelines of last year's Africa Oil Week.

He indicated Sudan had embarked on what he called “effective dialogue and negotiations” with the US for the lifting of all sanctions. The US had partially lifted the economic embargo in 2017 and the minister expressed optimism the remaining embargo were to be lifted by the first half of this year.

“This is going to have a big impact on the economy of the country,” said Abdelgader.

Although it is not clear what direction the said negotiations between Sudan and the US will take now that Bashir has exited the stage and the new Military Council is still squaring it out with demonstrators who accuse the uniformed officers of hijacking the Sudanese revolution, there is no doubt several plans for revamping the country's onshore and offshore upstream operations are in jeopardy.

Last year Abdelgader, whose current status in government is not known, had promised to have Sudan's oil and gas blocks bid window opened in the third quarter of this year as the country strategized to increase its proven oil reserves from the current 1.5 billion barrels.

“We know of 16 blocks but of course that may change based on studies to be done on the best strategy to approach the bidding (because) we want to make it as beneficial as possible,” he said.

“That could mean increasing the number of blocks or having less the 16 depending on whether we shall put all the exploration blocks for auction or just some of them,” he said, adding that the government will also take into consideration the size of the blocks, the blocks under development and the new ones in determining how best to proceed with the bidding process.

Sudan was initially expected to offer more than 30 oil and gas blocks for auction in the third quarter of this year, a plan that is in jeopardy with the dramatic security and political changes of last week and the uncertainty of the aftermath of these happenings.

Sudan's offshore oil and gas development on block 13 & 15, has been slow and far between despite increasing pressure to increase production after the country lost nearly 75% of its output to South Sudan during the latter's secession and the remaining oil fields have hit maturity and nearing depletion and are only yielding crude because of deployment of enhanced oil recovery techniques.

Block 13 in Eastern Sudan has a large share of acreage offshore, estimated at 18,392 square kilometers, and a smaller part of 7,514 square kilometers onshore. The Ministry of Oil and Gas says 8,236 kilometers of 2D seismic data is available and that a hydrocarbon system “is proven by the gas shows in the two out of the three wells drilled.”

The Ministry was also hoping to woo more exploration investment in Block 15, which lies in water depths of between 50 meters to 760 meters in the Sudanese Red Sea. To date 11 wells have been drilled with eight of them “showing hydrocarbons.” Sudan has been using the proximity of three seaports, two marine terminals and a refinery to the block as a selling point to potential upstream investors.

This gas-prone offshore block has previously attracted the attention and participation of Russia's ROSGEO, Malaysia's Petronas, China's CNPC and Nigeria's Express Petroleum although not much progress has been towards achieving earlier outlined exploration and production targets.

But now with the toppling of President Omar al-Bashir, it is not clear what changes the new leadership will make to the three key oil sector agencies including the Ministry of Petroleum, the Sudanese Petroleum Corporation and Sudapet, with claims they were staffed with sympathizers of the fallen regime.

Reorganizing this key oil sectors may take time and this could hold back even further the planned award of exploration licenses in Sudan at a time when the country is in dire need of increased output to support the struggling economy.

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