Africa News blog

African business, politics and lifestyle

Breaking down the walls – Sudan’s oil transparency push

August 19, 2010
It was a just another seminar on transparency in the oil sector. Seemingly banal.
But this was being held in Khartoum, involving live debates between northern and southern Sudanese officials, a minerals watchdog and the international media, who were allowed free access to publicly grill those who administer what has for years been an absolutely opaque oil industry.
What emerged was surprisingly positive and all walked away feeling that — at least until the Jan. 9, 2011 referendum on southern independence — this was the first step towards finally unpicking all the stitches that have sewn the sector tightly shut to outsiders.
We are “PR stupid” said the newly appointed Minister for Energy from the former southern rebel Sudan People’s Liberation Movement Lual Deng who instigated the forum.
He said this to explain the discrepancies in oil production and oil prices uncovered by the Global Witness NGO whose report “Fuelling Mistrust — the need for transparency in Sudan’s oil sector” provoked the discussion.
These include figures published by the ministry of finance web site of oil revenues with little clarification of how they had been calculated, even citing barrels of Sudanese black gold selling for as little as 15 cents a barrel.
It also found discrepancies between China’s CNPC who dominates Sudan’s oil sector dogged by U.S. sanctions, and Sudan’s energy ministry output figures. Those figures were easily explained as the difference between gross production and net of water, gas and solids on Wednesday.
But the fact an international giant like CNPC is publishing undefined production figures in an annual report provoked concern even from Sudanese officials.
And why did it require such an elaborate showcase to provide such a simple response? Minister Deng’s answer was the “PR stupid” line.
After months of chasing and waiting in vain for a reply from The government or CNPC to the discrepancies in oil output, including having the phone hung up on them by the Chinese, Global Witness went ahead and published their work.
“Next time you should just call us to verify the figures,” was CNPC’s ironic response, with the presenter who had flown in from Beijing for the forum, flashing on a PowerPoint screen the email and mobile number of CNPC’s country manager in Sudan.
Just five minutes earlier that same manager had declined my request for a meeting or to share his contacts “in the interests of transparency.” One of dozens of attempts I have made over the years to extract any information from the state-owned firm.
I wonder how long he will keep that mobile number.
But if you sifted through the barbed comments by Sudanese officials directed at the Global Witness reps and the attempts by CNPC to ridicule the figures, important progress was made.
Sudan said it would commit to the Extractive Industry Transparency Initiative, to which CNPC gave its support. It also agreed to a full audit back to 2005 and the ministry said it would publish daily production figures. It also gave French oil giant Total a public guarantee that whether or not the south votes to secede in just five months, its oil concession contract would be honoured.
If all this happens, it will be a massive step towards opening up Sudan’s taboo oil sector which could convince those elusive big European companies who left during Sudan during the north-south civil war to come back and invest.
Do you see European companies investing in Sudanese oil and gas?
If Europeans come back in should U.S. sanctions be lifted to allow American firms to compete for the spoils?
Is Sudan – likely to split into two countries in five months –worth the risk for investors?

oilIt was a just another seminar on transparency in the oil sector. Seemingly banal.

But this was being held in Khartoum, involving live debates between northern and southern Sudanese officials, a minerals watchdog and the international media, who were allowed free access to publicly grill those who administer what has for years been an incredibly opaque oil industry.

What emerged was surprisingly positive and all walked away feeling that — at least until the Jan. 9, 2011 referendum on southern independence — this was the first step towards finally unpicking all the stitches that have sewn the sector tightly shut to outsiders.

We are “PR stupid” said the newly appointed Minister for Energy from the Sudan People’s Liberation Movement, Lual Deng, who instigated the forum.

He said this to explain the discrepancies in oil production and oil prices uncovered by Global Witness, a non-governmental organisation, whose report “Fuelling Mistrust — the need for transparency in Sudan’s oil sector” provoked the discussion.

These discrepancies include oil prices published by the ministry of finance web site with little clarification of how they had been calculated, even citing barrels of Sudanese oil selling for as little as 15 cents a barrel.

Global Witness also found discrepancies between China’s CNPC, which dominates a Sudanese oil sector dogged by U.S. sanctions, and Sudan’s energy ministry output figures. Those figures were easily explained as the difference between gross production and net of water, gas and solids on Wednesday.

But the fact an international giant like CNPC is publishing undefined production figures in an annual report provoked concern even from Sudanese officials.

And why did it require such an elaborate showcase to provide such a simple response?  ”PR stupid”, said Deng.

After months of chasing and waiting in vain for an explanation from the government or CNPC of the discrepancies in oil output, even having the phone hung up on them by the Chinese, Global Witness went ahead and published their work.

“Next time you should just call us to verify the figures,” was CNPC’s ironic response, with the presenter who had flown in from Beijing for the forum flashing on a PowerPoint screen the email and mobile number of CNPC’s country manager in Sudan.

Just five minutes earlier that same manager had declined my request for a meeting or to share his contact details “in the interests of transparency.” One of dozens of attempts I have made over the years to extract any information from the state-owned firm.

I wonder how long he will keep that phone  number.

But if you sifted through the barbed comments by Sudanese officials directed at the Global Witness reps and the attempts by CNPC to ridicule the figures, important progress was made.

Sudan said it would commit to the Extractive Industry Transparency Initiative, to which CNPC gave its support. It also agreed to a full audit back to 2005 and the ministry said it would publish daily production figures. French oil giant Total was also given a public guarantee that whether or not the south votes to secede in just five months, its oil concession contract on southern soil would be honoured.

If all this happens, it will be a massive step towards opening up Sudan’s taboo oil sector which could convince those elusive big European companies that left during Sudan during the civil war to come back and invest.

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •