OPEC Invites Sudan to Join

29 May 2006

Sudan. Darfur is in the west.

OPEC has invited Sudan to become a full member of the oil cartel, according to Sudan’s official news agency. The invitation came in a letter from Nigerian President Olusegun Obasanjo, who holds the rotating presidency of the Organization of the Petroleum Exporting Countries (OPEC), to Sudanese President Omar Hassan al-Bashir.

Sudan, according to a subsequent statement by Sudanese Energy and Mining Secretary General, Dr. Omar Mohammed Khair, is evaluating the benefits and drawbacks. (Part of that evaluation must include its relationship with China, the largest importer of Sudanese oil. Earlier post.)

In 2005, Sudan oil production averaged 363,000 barrels per day (bpd), making it a small producer. The country has been attending OPEC meetings as an observer for more than five years.

According to the US Energy Information Administration (citing Oil & Gas Journal), Sudan contained proven conventional reserves of 563 million barrels as of January 2006—more than twice the proven 262 million barrels estimated in 2001.

The Sudanese Energy Ministry estimates total oil reserves at five billion barrels. Due to civil conflict—including the genocide in Darfur—oil exploration has been mostly limited to the central and south-central regions of the country. There are estimates of large potential reserves are held in northwest Sudan, the Blue Nile Basin, and the Red Sea area in eastern Sudan.

The Sudanese government has set a production target of 600,000 bpd by the end of 2006. This target will likely be achieved if new projects come online and proposed output increases are realized. In 2005, Sudanese oil consumption averaged 82,000 bbl/d. This was a 15% increase over the 70,000 bbl/d consumed during 2004.

An assessment done by PFC Energy on Sudan in 2002 notes that Sudan’s oil fields are among the smallest average size in the Middle East, meaning that fields will tend to peak sooner, forcing producers to find other fields or go elsewhere.

The oil industry has had high expectations dashed more often than realized. Exploration is a science but of limited precision in rank wildcat areas like Southern Sudan. In planning the future of Southern Sudan huge oil wealth should not be considered as guaranteed.

The oil industry can bring more than just oil wealth. It can bring social develop funds, scholarship funds, infrastructure, employment. [It can also bring] added corruption and an economy that becomes addicted to a resource that depletes very rapidly.