文I本刊记者 许成之 张梅 卢爱任 翻译I王晓波
Xu Chengzhi ZhangMei Lu Airen, China Investment
On May 14, 2018, Sudanese President issued an order to make major adjustments to the main government officials. Former Sudanese Oil Exploration and Production Management Director Mr.AzhariAbdul-Gadir Abdalla were appointed Minister of Sundan’s Ministry of Petroleum & Gas. In July, at the invitation of the Sudanese Embassy to China, In the meeting room of Sudan's ministry of petroleum and gas, Mr. Azhari, the minister, explained to reporters the development goals of Sudan's oil and gas field and the prospect of cooperation between the two countries.
China Investment: Thank you, minister. Thank you for your time and agreeing to receive us and accepting the interview. We'd like to know like how important now is the oil and gas in the national economic development of Sudan?
AzhariAbdul-Gadir Abdalla: It's very important, in brief, but actually, the economy of Sudan is dependent, to a great degree, on the oil resources. Historically, we started producing and exporting oil back in 1999. And that was the first cargo in August of 1999. Of course CNPC the Chinese company had a major role not only in the upstream preparations, but also downstream by constructing the pipeline, then actual exported oil. Since then, there was a lot of development in Sudan going in parallel with an increase in the daily production. So this increase went from 120,000 to close to 500,000 barrels per day back in the 2011 just before the secession of South Sudan. Yes, so with that development, the economy became dependent on these resources to maintain a quick GDP growth. It became very important in driving all of the economic growth and progress in the country. So it's very important. Then after secession of South Sudan, about 75% of the resources went to South Sudan, and that's really compromised the economic balance in this country. And I guess it makes sense. It also made sense to the international community, to the point they all encouraged South Sudan to pay for this economic shock, if you will. And that's why they agreed to pay around 3.5 billion dollars to pay in three and half years. So to answer your question, yes, it's very important.
China Investment: But since South Sudan was in civil war, basically has been civil war, is South Sudan able to pay?
AzhariAbdul-Gadir Abdalla: Well, when the secession took place in July 2011, South Sudan was very peaceful and everybody was happy. Then the trouble started later to the point there was fighting between the different factions. So in the beginning, they were paying based on the agreement which was linked to the level of production. So for every barrel we're getting fifteen dollars and so on. So they paid until the war broke in South Sudan and then the production stopped in 2015. The production resumed in the eastern part, but in the western part, the production did not resume.
China Investment: So since 2011, obviously, there's a shock to the Sudan economy. How has the oil and gas industry developed in Sudan and what challenges has industry encounter, and how has the government dealt with those challenges?
AzhariAbdul-Gadir Abdalla: Three issues I must mention. Number one, 1997. There was an embargo imposed upon Sudan by the United States, and that continued until 2017, just last year, last October, actually. So 20 years of embargo. In the beginning, it was not that tight. But as we went along, you've got tighter and tighter to the point there were big fines on some of the European banks that were dealing with Sudan. That's one factor. The other factor, of course, is secession.
The third one was the sharp decline in oil price in 2014. You know, we went from 110 dollars down to 28 dollars a barrel in the January of 2016.
So these three factors work together and impacted heavily the oil industry. And of course that also caused Sudan to borrow from the investors like CNPC and others. But that's created huge amount of debt, but you know that also negatively impact the progress in terms of developing and producing more oil. So all in all, it's negative, you know, for all these time, but we managed to survive. We do thank companies like CNPC you know, for understanding and also standing shoulder to shoulder with us, you know, so we can still continue.
China Investment: Okay, you mention CNPC, so how do you see China's oil and gas development? Like how do you compare China and Sudan in this respect?
AzhariAbdul-Gadir Abdalla: Well, of course, it's a big difference. China has a huge demand, of course. And although in China to produce in oil quite substantial oil and gas, you know, like Daqing the last account they were producing close to 78,000 barrels a day, used to be more than that for more than thirty years. And also they produce in a filed called Liaohe and also in the west Xinjiang area, Sichuan, so there’s a lot of production. But it still has not been enough, to meet the fast development in China. China is the number two economy in the world now. They can afford to import. But for Sudan, like I said, after the separation of south Sudan, it has been really difficult. So many other factors also play a role. And we had a little bit of instable, you know the environment here. But we are now in my opinion about to enter into a new phase, which is going to be good, actually, for any investor to come to this country. This country is full of resources, not only oil, so much resources and this is in terms of natural water resource, probably one of the highest in the world, in terms of fertile land, more than 200 million hectares, arable land, in terms of live stocks, more than forty million heads, in terms of minerals – iron, copper, gold, chromium and so on. Also we have oil and guess what this is. So what's happening now? Just recently about ten days or two weeks ago, our president mediated to reach peace in South Sudan. All factions signed to that. And then based on that, our ministry directed by our president and ministry, our counter partners also directed with their president, and I had just one visit there in June, just so we agreed to resume production from the field where we stopped production since 2013.
And that would be great for most countries. We have the know-how in Sudan. We have the technicians, geologists, engineers, physicists and so on, all the human resources needed to work on this to help the resumption. But also we have a lot of companies, field service companies that can also help in bringing up production and put them back on track.
China Investment: How will the resumption of the oil production benefit both sides? Can you explain that a little bit?
AzhariAbdul-Gadir Abdalla: In two aspects, from a political point of you, the stability and the peace that will come to both countries is the foremost and most important outcome of this. But also economically, there would be benefits from selling the oil for the government of South Sudan, because they own large resource. But for us also, since the pipelines cross our land to the port, and also the processing centers also located in Sudan. So there would be fees to be paid to the government of Sudan. So that will also resume paying the so called financial assistance because that is linked to the production. If there is no production, then there's no payment.
China Investment: So since 2011, in terms of China-Sudan cooperation in the oil and gas sector, what has been achieved? Anything outstanding? Any typical or exemplary projects in this corporation?
AzhariAbdul-Gadir Abdalla: Yeah, well, since 2011, the amount of oil reserves dwindled immediately after secession. Along with other factors that took place after the secession, such as the drop in oil price, it was not conducive, you know, for the investors to bring in our currency and to invest. Because the oil price went all the way down to 28 dollars per barrel. For any investor including CNPC it was not really an exciting moment. The cost here, of course, is low in some cases in some of the blocks, which is 19 or 20 dollars. So if you were producing for 19 or 20 dollars, sometimes 24 dollars, and then you sold for 28 dollars, it didn't make sense businesses-wise. So that by itself slowed down the process for the investors, including CNPC. Nevertheless, there was still work ongoing. And that's why I say we do appreciate the support, you know, from CNPC as well as Petronas the Malaysian company, or Oil India. But if we go before 2011, there was huge cooperation, you know, when we started this project back in 1997, CNPC had a huge impact on the oil exploration, development and production. They built, constructed the pipeline in record time, eleven months by working day and night in the field. And then they constructed more than one thousand five hundred kilometers. They also constructed the refinery in Khartoum, which was a great achievement and a very important milestone in the oil industry in Sudan. And also was a key cooperation between the ministry and the CNPC. So there were many achievements.
China Investment: And so, looking ahead, are there any challenges in terms of China-Sudan cooperation in oil and gas sector? And how can we cope with possible challenges? And what expectation do you have from the Chinese side to help achieve goals or plans if there're any?
AzhariAbdul-Gadir Abdalla: This is probably the best time. Now, so many things are happening. Number one, we have stability along with peace in South Sudan. And that will open up the chance for South Sudan and Sudan to make revenue from the oil already existing in the ground. And like I said, this will start soon. That's one. Of course, that's also good for CNPC and other investors. They are partners there and they will receive part of the revenue immediately. The other thing that's happened and really big, is this some lifting of the embargo. The embargo, back in October was announced that it's been lifted. But to be honest, practically, it was still impacting or transactions. But just about last week, actually, they announced two measures from the OFAC (an organization in the American government taking care of financial embargos) and these two steps will allow us to have free bank transactions not like before. So now for any investor – it used to be a big problem – now it is not afraid to bring in money and to get out from Sudan, this used to be almost impossible, which created big problem for us. But the environment with these factors was not really conducive and attractive for people to come in. But now it's definitely, we're ready to take off. Also, the agreement with South Sudan, as well, also will open up a lot of opportunities for any investor was coming to Sudan to also invest in South Sudan, because it has also been announced by our President about ten days ago, that the border points are now open for trade exchange, you know, in this peaceful environment.
And this will open up Sudan completely for oil resources and other resources. Another point is that, Sudan is actually the corridor we go into western Africa and also into eastern Africa for investment and for bringing the businesses. And I think the other thing also here internally know for the oil and gas. What we do, the ministry of oil and gas has a special entity in terms of all the activities on the requirements – governmental requirements for the investor in oil and gas, would be done in this building, you know, like tax, any fees, immigration issues. We have been fully authorized by the cabinet. The one stop service. One stop, you know, whatever that agreement that we sign. We are the custodian of the agreement from all aspects from us, which makes it very easy to just come in and start investing.
So I take this opportunity actually to invite Chinese companies who have not yet been to Sudan. You know, now it's really the time and resources are there. We have about 18 blocks lying there to be explored.
China Investment: How do you see the prospect of the future China-Sudan cooperation in oil gas and also beyond in other aspects too?
AzhariAbdul-Gadir Abdalla: In oil and gas, there have been some hard time after the secession, and other factors. But my view is that now we are going towards getting out of the hump. With CNPC and all other Chinese companies, we have had an excellent record in terms of achievements, in terms of cooperating together. And also our project actually was one of the first project for CNPC worldwide. We also created very intimate relationships over the years. My vision is that, from here on out, it's just going to be a very good chance for investment in the oil and gas but also, as you mentioned, other sectors. Some Chinese companies are already investing in the construction sector, in the electricity power generation, in agriculture. Construction covers so many aspects, you know, like building, constructing dams, roads crossing country roads, and buildings. The building we are in was constructed by a Chinese company as well. So there are many ways of investment cooperation between the two countries. Also in mining, there are Chinese companies that are investing.
China Investment: If you are invited to speak directly to the potential Chinese investors, you want them to put their money in Sudan and not other countries, what the message do you have to say to them?
AzhariAbdul-Gadir Abdalla: My message is this country is blessed with a huge amount of resources, from all types, all aspects with huge volumes. And that's why now we do have many countries willing and happy to come and invest. As a matter of fact, now we have the first American company coming Sudan already on the ground with their equipment. This is Baker Hughes. If you heard of Baker Hughes, it is one of the worlds’ four major oilfield service companies. So they created a joint venture with one of our national companies. So that gives you an indication, because we have been inviting in the American companies to come for years, and there was no response. So now they're coming. That would tell investors in China as a good indication. Yes. You know that things are going to look up and there are so many opportunities in this section. And I would say whoever comes first probably will get the better chance, although all of them are good. I would also say to potential investors that we are more than willing to facilitate their businesses in Sudan and to ensure that their investment would be fruitful for them. Because people are coming and this is business. You know, you want to invest but make profit. And we pledge as the government to create all the necessary environment, and necessary steps for the investors to come and enjoy. And I would say also, so that is a very nice place in terms of the weather, it's a it's a bit dry on that. But the people are friendly. And many of our Chinese friends, when they come and work in oil, sometimes they don't want to go back. I'm serious, they like it here. And we like them as well. So it's also an important aspect. You know, you're welcome. You can walk around the streets safely. It's very safe and nice. But the most important is it’s full of resources. And the government is now more than willing to facilitate and make all the steps easy and straightforward.