Sudan Targets 35% Increase in Oil Output Next Year

August 18, 2010, 11:00 AM EDT

By Maram Mazen and Alaa Shahine

(Updates with Chinese in third paragraph, deal in fifth.)

Aug. 18 (Bloomberg) -- Sudan hopes to increase oil production by 35 percent in 2011, as European and Arab investors show more interest in exploring for crude in Africa’s biggest country, Petroleum Minister Lual Deng said.

Sudan, the third-largest producer of crude in sub-Saharan Africa, wants to raise output to 650,000 barrels a day next year from its current level of as much as 480,000 barrels a day, he told reporters in the capital Khartoum.

“Amazingly, the interest is up, and from Europe,” Deng said. European and Chinese companies as well as a Saudi investor have expressed interest in operating in a concession in southern Sudan, he said, without identifying any of them.

Most of the county’s oil is found in the south, which gained a semi-autonomous status after a 2005 peace agreement that ended a two-decade civil war with the north. Under the agreement, the south is scheduled to vote in January on whether to secede and form an independent state.

Petroleum Ministry officials plan to sign an agreement tomorrow with representatives of Fenno Caledonian Holding Ltd. of Finland for the exploration of crude in northeastern Sudan, said Azhari Abdalla, head of the ministry’s oil exploration and production administration. The concession in an area called Block 10 covers the states of Kassala and Gadarif, according to the website of the state-run Sudapet oil company.

Chinese Involvement

Deng, a southerner, said part of the targeted increase in oil production would come from a concession called Block 6 run by China National Petroleum Corp. in the central state of Kordofan. The Chinese company acquired the concession in 1996, according to its website. The government also plans to build a small oil refinery in the south’s Unity State, he said.

Sudan relies heavily on oil exports for its foreign currency earnings. The country’s gross domestic product swelled to $53 billion in 2008 from $10 billion in 1999, the year Sudan began exporting oil, the World Bank said in June. Annual per capita income increased to $532 in 2008 from $334 in 1999, the bank said.

The south’s ruling Sudan People’s Liberation Movement has accused the northern National Congress Party of President Umar al-Bashir of obstructing the process leading to the vote on possible southern secession and independence, as well as of taking more than its share of revenue, charges the NCP denies.

Analysts at the Brussels-based International Crisis Group have warned that Sudan risks returning to civil war unless the parties put the peace agreement into effect. Under the deal, the two regions equally share oil revenue.

The government plans to hire an independent auditor to examine Sudan’s oil revenue since 2005, Deng said today. Results of the audit should be announced before the south’s referendum, he said.

--Editors: Bruce Stanley, Rob Verdonck

To contact the reporter on this story: Maram Mazen in Khartoum via Cairo newsroom at [email protected] Alaa Shahine in Cairo at [email protected]

To contact the editor responsible for this story: Peter Hirschberg at [email protected]