VZCZCXRO9305
PP RUEHROV
DE RUEHKH #1921/01 2260525
ZNR UUUUU ZZH
P 140525Z AUG 06
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 4127
INFO RUCNIAD/IGAD COLLECTIVE

UNCLAS SECTION 01 OF 02 KHARTOUM 001921 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR AF/SPG, AF/EPS, EB/IFD, AND EB/ESC 
DEPT PLS PASS USAID FOR AFR, AND ALSO PASS USAID 
 
E.O. 12958:  N/A 
TAGS: PREL PGOV EFIN EPET ECON EAID SU
SUBJECT:  Distributions of Sudan's Oil Revenue 
 
¶1.  Summary:  Net revenue accruing to Sudan from oil production for 
the first five months of 2006 totaled $1,086.9 million.  Of this 
total, $685.3 million was allocated to the North and $391.6 million 
to the GOSS.  In addition, $234.1 million was transferred to the Oil 
Revenue Stabilization Account and $28.4 million to state 
governments.  Revenues are expected to continue at the same or 
slightly higher levels through the end of 2006.  Distributions to 
the GOSS are projected conservatively at between $60 - 70 million 
per month for the next several months, according to Central Bank 
sources.  End Summary. 
 
Overall Oil Revenues 
-------------------- 
 
¶2.  In early August, the Petroleum Unit of the Ministry of Finance 
and National Economy released figures on government oil revenues. 
The figures show details for the month of May as well as totals for 
the year to date.  The net revenue accruing to the government for 
the January through May time period totaled $1,086.9 million 
dollars.  Of this amount, $553 million was from export revenues and 
$533.9 million from sales to local refineries. 
 
 
Distribution to GOSS 
-------------------- 
 
¶3.  The published figures show $391 million in oil revenue 
transferred to the Government of Southern Sudan (GoSS) from January 
through May.  This is a sum of the revenues from exports and crude 
going to local refineries, with the following breakdown: 
 
Month       Export Revenue    Local Sales      Total 
 
Jan             39.2             33.2           72.4 
Feb             29.2             32.2           61.4 
March           37.5             40.4           77.9 
April           48.2             38.6           86.8 
May             45.5             47.6           93.1 
Total          199.6            192.0          391.6 
 
In addition to the above amounts, direct transfers of $28.4 million 
were made to the oil-producing states of South Kordofan and Unity. 
Transfers made from the Oil Revenue Stabilization Fund (ORSA) are 
not included in the above total. 
 
May 2006 Production and Revenue 
------------------------------- 
 
¶4.  According to information provided by the Ministry, total oil 
production for May was 7,386,000 barrels, or about 240,000 barrels 
per day (Note:  this is considerably below the production level of 
450,000 bpd projected at the beginning of the year. Septel will 
provide additional information.  End note.)  Of this amount, 
5,272,000 barrels (71.38 percent) was from wells in the South. 
Total production is divided between producing companies and the 
government.  Exports of government oil totaled 3,351,717 barrels and 
generated revenue of $224.6 million.  Local refineries took 
2,201,000 barrels of government oil.  Any amount received above $45 
per barrel on exports of government oil is transferred to the Oil 
Revenue Stabilization Account (ORSA); for May this amount was $73.7 
million. 
 
Formula for Dividing Proceeds 
----------------------------- 
 
¶5.  Division of the income from oil follows a defined process. 
First, petroleum produced in Sudan is divided between producing 
companies and the Government, per production sharing agreements, 
with about 60 percent going to the government.  Under provisions of 
the Interim National Constitution, the government's share is 
distributed among the Government of National Unity, the GoSS, and 
several state governments.  The constitution lays out a mechanism 
under which net revenues are defined as the sum of government oil 
exports and sales of government oil to local refineries, less 
management and transportation fees.  Two percent of net revenue is 
allocated to the oil producing states in proportion to the output 
produced in each state.  Proceeds from exports are deposited in the 
Bank of Sudan, and any amount in excess of the benchmark (currently 
$45 per barrel) is transferred to the ORSA.  After the payment to 
the ORSA and to the oil producing states, fifty percent of net oil 
revenue derived from wells in Southern Sudan is allocated to the 
GoSS and fifty percent to the Government of National Unity and 
states in Northern Sudan.  Proceeds from local sales of crude to 
refineries are distributed to the North and the GoSS, again using 
the formula of a fifty/fifty split between the North and South of 
net oil revenue derived from wells in Southern Sudan. 
 
Revenue to Continue at Similar Level 
------------------------------------ 
 
 
KHARTOUM 00001921  002 OF 002 
 
 
¶6.  In a recent conversation with a source at the Central Bank of 
Sudan, poloff was told that the projections are for monthly 
transfers of oil revenues to the GoSS to continue through the end of 
the year in the range of $60 to $70 million, which is roughly the 
level of the first five months of the year. 
 
HUME