4.1 Reaching out to new investors

Isolated by Western powers but in dire need of the oil money, Sudan began to lure major national oil companies from East Asia, particularly China, and India to a lesser extent. It has been argued the move to the east seemed the only choice available to Khartoum given the reluctance of Western companies because of security concerns, the civil war and the increasing suspicion about the regime’s Islamic tendencies and extremist practices (Sidahmed 2016). This move also aligned squarely with the resource need of these countries whose economies were growing by leaps and bounds. As Patey (2017) argues, ‘Eastern parastatals, led by a surging China, eager to capture international energy resources to fuel their budding economies and supported by the plural relationships fostered between their respective governments and the ruling, riverine elite in Khartoum, tactfully established a dominating presence’. The role of the national oil companies from East Asia, especially CNPC of China, has therefore been central to Sudan’s oil production. The importance of this can be seen in the fact that these companies, unlike their counterparts from the West, have ignored the US-led divestment campaign in Sudan’s oil sector (Patey, 2009).

In 1983, the White Nile Petroleum Company (a consortium led by Chevron and including Royal Dutch Shell, the Sudanese government and the Arab Petroleum Investment Corporation) was formed to build a US$1 billion dollar pipeline to connect the oil fields in the South to Port Sudan on the Red Sea (Zaida, 2007). With the start of the second civil war, this project was abandoned, leading Chevron to decommission its activities in 1984, selling its interests to the Sudanese company Concorp in 1992. Concorp subsequently sold these concessions to the Government of Sudan, which in turn sold their interest in 1994 to the Canada-based State Petroleum Company, which was acquired in that same year by Arakis Energy from Canada (Lado, 2002). Arakis sold 75 per cent of its shares in 1996 to the China National Petroleum Company (CNPC), Petronas (Malaysia) and Sudapet (Sudan’s national oil company). These companies formed the joint venture known as the Greater Nile Petroleum Operating Company (GNPOC), which made considerable discoveries, increasing the amount of proven reserves in Sudan. Arakis subsequently sold its 25 per cent share in the GNPOC in 1998 to Talisman, another Canadian company. In addition to building the Khartoum oil refinery, the consortium constructed a pipeline from the Heglig and Unity fields to Port Sudan, with the pipeline becoming operational in 1999 and marking the start of Sudanese oil exports (Sidahmed, 2016). Talisman, however, sold its shares in GNPOC to the Indian Oil and Gas Corporation (ONGC) due to international pressure with regards to its continued operation in a country being accused of human right violations.

The three largest of the 15 oil companies currently operating in Sudan – CNPC, Petronas of Malaysia, and India’s ONGC Videsh – are from Asia which together owns 95 per cent of GNPOC, a joint venture that accounts for 88 per cent of total oil production in Sudan (Helly, 2009).

Table 1 below shows you which oil companies were operating in Sudan before South Sudan’s secession. You can also refer to Figure 1 to see the areas in the country that the Blocks refer to.