Sudan: new oil rush begins

A new African state is to appear in the political map of the world. Sudanese President Omar al-Bashir has issued a decree on Khartoum’s official recognition of the results of a referendum on the independence of South Sudan. The virtual reconciliation of the North and the South prompts an oil rush in the region.

Formally Sudan will remain one country until the 9th of July. For all intents and purposes, this date will mark the birth of a new country in Africa on the territory of South Sudan. That land is inhabited by black Africans, as opposed to the Arab North. The referendum puts a stop to a war between them which has lasted for several decades. The civil interethnic confrontation grew particularly tense in the 1990s when oil was discovered in Sudan. In 1999 Khartoum sold its own oil in the world market for the first time and began to buy weapons. It was then that the diplomacy of resources began around Sudanese oil. It was pursued not only by China, the USA and West European countries but also some countries of the Middle East, Africa and Russia. This is the opinion of Konstantin Simonov, the director of the National Energy Security Fund:

“US President Obama has promised to recognize the new state in the near future. Other large countries will follow suit. One of the reasons for this policy is the presence of energy resources. US and other large Western companies are interested in getting their hands on them, hence Washington’s readiness to recognize South Sudan. China is traditionally demonstrating its interest, as it has always been a very active player in Africa. In recent years, China has spent a few billion dollars investing in oil and gas extraction in Africa because China is experiencing a growing shortage of energy supplies.”

Today Sudan takes third place in the Sahara region in terms of confirmed oil resources after Nigeria and Angola. It is clear that reconciliation in that country opens new opportunities for developing  “Sudan’s oil Klondike” with lower risks, believes Sergey Pickin, the director of the Energy Development Foundation.

“Thanks to its oil resources, that country can attract investors for oil field development, especially after the separation of the North from the South. The more so, because production costs are similar to those in the Arab countries. Apart from that, there is an opportunity to export this oil through the Red Sea and the Suez Canal. This means that the conditions for transporting this oil are also conducive to keeping  the costs low.”

Like other players in the world oil market, Russia would like to promote its energy interests in that region. Moreover, it is capable of becoming a serious competitor for both Western and Chinese companies in oil production and  power supply. Russia’s clear competitive advantages are its technological experience in developing oil fields in many regions of the world, its investment potential and the absence of any political conditions for energy cooperation. The latter is important both for Khartoum and Juba, the current administrative centre of South Sudan, because after the referendum both sides will have to reconsider the criteria of their independence.

By Fedoruk Vladimir

The Voice of Russia, February 8, 2011