Rising China and Africa's development: oil
Rising China and Africa's development: oil

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Rising China and Africa's development: oil

3 The history of Sudan and the role of CNOCs

Sudan is often seen as the testing ground for CNOCs in Africa. Luke Patey is a researcher who has written extensively on China’s involvement in the Sudans. He says that: ‘When they first entered the global scene in the 1990s, Chinese NOCs held few competitive advantages over international oil companies. They lacked the organizational capabilities and expertise to manage large projects overseas and had little experience with political and security risk’ (2017, p.756). In his work, Patey shows how experience in Sudan and South Sudan ‘were instrumental in leveraging the competitiveness of the China National Petroleum Corporation, China’s largest oil company, particularly through developing its risk management capabilities, and steering its global strategy’ (2017, p. 755).

While Patey focuses on domestic political conditions within the Sudans, in the remaining sections of this session, you are going to explore how significant international events interact with Sudanese factors to effect change in the way CNOCs are investing.

Sudan is a large country with a long-standing tension around a broad North-South divide which dates back to the colonial period. These tensions have been critical in terms of the country’s more recent political history in which oil has played an important part, as it was the first country where China’s oil industry made significant overseas investments from the mid-1990s onward. Sino-Sudanese relations stretch back much further, as Dr Janet Liao explains:

Download this video clip.Video player: Video 1 A brief history of Chinese NOCs in Sudan
Skip transcript: Video 1 A brief history of Chinese NOCs in Sudan

Transcript: Video 1 A brief history of Chinese NOCs in Sudan

JANET LIAO
Actually, China's relationship with Sudan started from 1950s. Then, Sudan was one of the first African countries to recognise the People's Republic of China. So there was a political kind of friendly relationship between the two countries for a long time. But initially, the PRC was quite weak economically and also even politically internationally. So actually, Sudan didn't have much dealing with China until the 1970s when Soviet Union fell off with Sudan. So those bilateral relationships was collapsed. Then, China became a player in Sudan's politics. But then still not until the '80s, Sudan and China has got some trading relationships, which was mainly aimed at arms trade. It was not in the big scale, but that was an initial stage of the two countries to have a trade relationship. When the energy companies started to engage with Sudan, there were two versions, I think, to be presented here. One was that if you ask the oil company people, they said, OK, even before the states encouraged them to go to Sudan, already the Zhongyuan oil field, which is in the middle of China associated with Sinopec. They had difficulties inside China to find more oil and resources and to sustain their business development, so they wanted to go out to find opportunities. So even before the government's instructions, they started to go to Sudan actually with their provincial dedication to explore the opportunities, whether they could have new opportunities outside. So they went to Sudan in 1994. But then in 1995, the Sudan president visited China. And that time, he formally asked the Chinese government to help with their oil development after the international oil companies withdraw from Sudan, not completely, but largely. So then from that time, if you look at official documents, the Chinese government sent CNPC teams to Sudan to explore whether the geological conditions would fit with the Chinese technology. Then they found everything fit quite well because the Sudan geological condition there was quite similar to China's starting oil field. So later on, they just started to develop the oil fields business in Sudan.Then, during the past almost more than two decades, the CNPC led this joint venture in Sudan, Greater Nile Oil Cooperation, has actually helped Sudan to build not only its independent upstream industry but also the world downstream industry established as well. So that was viewed as a success by the Chinese side and also by the Sudanese government, I guess.
End transcript: Video 1 A brief history of Chinese NOCs in Sudan
Video 1 A brief history of Chinese NOCs in Sudan
Interactive feature not available in single page view (see it in standard view).

At the same time as China was starting to look outward, Sudan was facing international sanctions, so the interface between the international political and economic system and Sudan’s domestic politics was complex.

Activity 2 Sudan’s recent political history

Here, Professor el-Battahani, an authority on Sudan’s political economy from the Political Science Department at Khartoum University, outlines the recent evolution of the country’s politics. As you watch, consider:

  • Who has benefited from oil exploitation in Sudan?
  • What role did oil play in the consolidation of power in Sudan?
Download this video clip.Video player: Video 2 Politics of oil in Sudan: Part 1
Video 2 Politics of oil in Sudan: Part 1
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Download this video clip.Video player: Video 3 Politics of oil in Sudan: Part 2
Skip transcript: Video 3 Politics of oil in Sudan: Part 2

Transcript: Video 3 Politics of oil in Sudan: Part 2

PROFESSOR EL-BATTAHANI
Just going back to the impact of secession of South Sudan on the political scene in Khartoum, in addition to the difficult task the government had to face in terms of balancing the economic books-- in terms of generating new economic resources from over-taxation, for most treaty measures, from looking, also, for assistance from abroad-- there were also the task of the balancing political alliances. This, at the time, also, the government had moved away from the Iran axis, coming closer to the Arab-Saudi-led coalitions all with the hope of receiving economic assistance that would somehow alleviate the hard economic situation felt as the result of the secession of South Sudan and loss of oil revenue. But, again, this had not materialised and did not lead to the scale of economic assistance that the government had hoped for. So economic hardships actually continued and the government also tried, somehow, to manoeuvre around but still, situation economic situation in Sudan is very dire and very hard for the people to cope with.
End transcript: Video 3 Politics of oil in Sudan: Part 2
Video 3 Politics of oil in Sudan: Part 2
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