VZCZCXRO6033
PP RUEHROV
DE RUEHKH #0356 0450751
ZNY CCCCC ZZH
P 140751Z FEB 06
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 1435
INFO RUCNIAD/IGAD COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC

C O N F I D E N T I A L KHARTOUM 000356 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR AF/SPG AND EB/ESC/IEP 
 
E.O. 12958: DECL: 02/10/2016 
TAGS: EPET PGOV PREL SU
SUBJECT: SUDAN OIL PRODUCTION FALLING SHORT OF PROJECTIONS 
 
Classified By: POLOFF CURTIS STEWART, Reason: section 1.4 (b) and (d) 
 
 ¶1.   (C) Summary:  Oil production in Sudan has not reached 
levels originally targeted for early 2006, with current 
output running closer to 300,000 barrels per day rather than 
the 500,000 bpd anticipated.  A major pipeline has yet to 
start operations.  High prices have to some extent offset the 
lower than expected production.  End Summary. 
 
¶2.  (C) In several recent meetings with us, oil industry 
contacts agreed that current oil production in Sudan is 
running in the range of 300,000 to 350,000 bpd.  This is 
below the estimates in mid-2005 that production would reach 
500,000 bpd by the beginning of 2006.  The major reason for 
the shortfall is the delay in getting the pipeline operated 
by Petrodar into operation. 
 
------------------- 
Three Pipelines 
------------------- 
 
¶3. (C) Three oil pipelines have been constructed in Sudan. 
The oldest is the GNPOC pipeline from the Hileg field to Port 
Sudan completed in 1999.  This is a 28-inch pipeline with a 
maximum capacity of about 330,000 to 350,000 bpd.  When 
poloff visited the GNPOC offices on February 6, the operation 
of the software package was demonstrated and a volume of 
275,000 bpd was noted.  The manager, Suresh Kumar Batra 
(protect), said that the capacity of the pipeline could be 
expanded to over 400,000 bpd with the installation of 
additional pumps.  The production of White Nile Petroleum 
Operating Company (WNPOC) will be pumped through this line. 
According to a manager there, WNPOC has built a 170 kilometer 
feeder pipeline to connect with the Hileg pipeline and 
expects to  begin pumping at the end of March 2006 at a 
volume of about 30,000 bpd with volume to ultimately 
increase to 80,000 bpd. (Comment: In a separate meeting, a 
manager at WNPOC confirmed the start-up date of March 31 and 
the initial volume of 30,000 bpd. End Comment.) WNPOC will be 
charged a transit fee of USD 6 per barrel.  The GNPOC general 
manager noted that, with the added production from White 
Nile, the pipeline will be at, or beyond, its current 
capacity. However, he expects GNPOC,s production to peak by 
2007 and then decline.  In sum, he believes that expansion of 
capacity is not necessary at this time, as GNPOC production 
can be expected to trend downward from 2007, leaving 
sufficient pipeline capacity for WNPOC production. 
 
¶4. (SBU) The second major pipeline is the 32-inch Petrodar 
line from Blue Nile state to Port Sudan.  This line was 
originally projected to be in use by August 2005.  This date 
slipped to October, 2005 and has now slipped again to March 
¶2006.  A GNPOC manager stated that he doubts that the line 
will be in operation before June 2006.  There have been a 
series of problems, the latest reportedly having to do with 
port handling systems and electric power generation at the 
Port Sudan end of the line.  When the Petrodar line comes on 
line, it should add about 200,000 bpd to exports.  If 
additional pumps are installed, the maximum capacity of this 
pipeline would reportedly be over 400,000 bpd.  According to 
the GNPOC general manager, the combined, maximum capacity of 
the GNPOC and the Petrodar pipelines would be close to 1 
million bpd, if all upgrades were made. 
 
¶5. (C) The third pipeline is operated by the Chinese and runs 
from block 6 in Kordofan, via the refinery north of Khartoum, 
to Port Sudan.   According to the manager at GNPOC, this line 
is reportedly pumping only 10,000 to 12,000 bpd, with the 
production going into the Khartoum refinery. A manager at 
Lundin petroleum gave the same figure for volume of 
production. The pipeline was reportedly built in anticipation 
of a volume of 170,000 bpd.  The manager at Lundin petroleum 
believes the Chinese have not been able to produce as much 
oil as planned, supposedly due to the difficult geology and 
less productive fields than expected. 
 
--------------------------------------------- ------- 
High Prices Offset Disappointing Production 
--------------------------------------------- ------- 
 
¶6. (U) If the Petrodar pipeline begins operation in June, and 
the WNPOC production begins as scheduled by late March, total 
production will rise to the neighborhood of 500,000 bpd. 
While production seems to have fallen short of earlier plans, 
the financial impact on the government revenues as been 
cushioned to some extent as the high price of oil has offset 
the lower production. 
HUME