The signing of an agreement to end two decades of civil war in Sudan not only brings the opportunity for millions of people to return home and begin new lives, but also carries with it a chance for investors to make money in a needy country with large oil reserves and, now, substantial international goodwill.
Experts predict that oil and gas companies will rush in to expand Sudan’s oil production from the 345 000 barrels a day recorded in June 2004. The country has proven reserves of 635-million barrels, much of which could not be accessed during the war because of fighting.
Under the peace agreement, oil leases signed by the government during the war will be respected. The largest lease holders include the China National Petroleum Company, Malaysia’s Petronas, ONGC Videsh Limited of India and Sudan’s Sudapet.
That doesn’t mean there aren’t still many opportunities. French oil giant TotalElfFina announced in late December that the company has renewed oil agreements with Sudan that were abandoned because of the war in 1985. Sudan’s energy ministry also announced that oil production will increase to 500 000 barrels a day.
The United States has enforced sanctions against Sudan for being a state sponsor of terrorism, but in the run-up to the peace agreement, US Secretary of State Colin Powell promised that an end to fighting in Sudan will speed up the normalisation of relations.
The US government has also made it easier for major companies to get exemptions from the sanctions.
US oil companies have recently begun to show interest in Sudan’s undeveloped oil fields. Houston-based Marathon Oil has resumed payments to the government as part of its partnership with TotalFinaElf in Block 5, an area of intense fighting during the war that could have one billion barrels in reserves, a US business consultant said on condition of anonymity.
Duncan Bonnett, a partner at the consulting firm Whitehouse and Associates in Johannesburg, South Africa, said many international companies have already sent teams to Sudan’s capital, Khartoum, to investigate opportunities not only in the oil and gas sector, but in agriculture, construction, engineering and other services.
”From an export point of view, machinery and equipment supply; recreating the concrete industry; rehabilitating industries that already exist; and taking advantage of the agro-industry side, will [present significant opportunities],” said Bonnett, who specialises in emerging markets.
South African companies, many with experience working in countries emerging from conflicts, such as Mozambique, Angola and the Democratic Republic of Congo, are aggressively moving into Sudan, he said.
A trade fair in Khartoum attracted more than 500 companies from 15 countries, ranging from a French yeast firm to a Spanish company offering ceramic tiles.
”Sudan is going to be number one in Africa and the world for investment because it’s a large country and the infrastructure is zero,” said Tajeldin Awad, director of Spanish firm Emigres’s Sudan operation. ”People need buildings, power, highways, hospitals; they need everything.”
The government instituted dramatic economic reforms in 1998 and in 2004 registered a 7,5% growth in gross domestic product.
But inflation topped 8% in 2004 and Sudan’s 38-million people averaged only $1 900 (R11 300) a year in income, high by African standards, but low compared with most oil producing countries.
Agriculture made up 38% of Sudan’s GDP in 2003 and employed 80% of the country’s workers in cotton, sesame, livestock, groundnut and sugar production. In 2003, the country attracted $1-billion in foreign direct investment, said Nasser Hashim, an official at the Ministry of Investment, and experts say that number will quickly climb.
But while Africa’s largest country offers many opportunities, sceptics and those with experience working in southern Sudan say there are many uncertainties and difficulties ahead. Southern Sudan has seen virtually no development since the 1950s and more than four million southern Sudanese fled their homes during the war.
The agreement allows the southern Sudanese to hold a referendum on independence in six years, setting the stage for more conflict with the north should pro-independence forces win.
Phil Heilberg, founder of New York-based Heilberg Management Group, said he encountered massive incompetence, unreasonable expectations and political infighting when he agreed to help the rebels in their business dealings in 2003. After a $100-million deal fell apart because the rebels wanted to renegotiate the contract at the last minute, he gave up.
”There are some parts of the SPLA [Sudan People’s Liberation Army] that know how to destroy and don’t know how to create,” Heilberg said. ”They really have very little experience dealing with the international community … This is a very complex situation here, then when you complicate it with the people who are involved now, it is virtually impossible to solve.” — Sapa-AP