Oil-gas explorer White Nile Ltd. recently raised the white flag in Sudan, saying it plans a change of mission and will now invest in African agriculture.
White Nile said that’s happening because the current economic environment and political situation in southern Sudan are not conducive to funding nonproducing early stage oil and gas exploration.
By contrast, it said, the agricultural and associated civil engineering industries in Africa are resilient enough to generate returns on investment even in the current economic environment.
That’s hard to figure until you add in the fact that White Nile—soon to be called Agriterra—could not begin its operations in southern Sudan until January 2011 when the region holds a referendum on total independence.
White Nile, chaired by former England cricketer Phil Edmonds, said violence in southern Sudan has prevented its clarifying its exploration rights on Block Ba.
No guarantees
In fact, the firm doesn’t think it will be able to clarify its rights any time soon, and certainly not before the planned referendum on independence for southern Sudan.
White Nile would have no guarantee that the planned referendum—assuming it were held—would give them the desired result. Independence could be turned down, and there would go White Nile’s deal.
Even if independence were approved, White Nile would still have no guarantees that its agreement would be honored by the government of southern Sudan. Too many other things could happen by then.
So, White Nile said it will quit the oil and gas business in order to invest in and develop projects with an already proven business model, and in areas that attract foreign investment….
As for political stability in Sudan, things don’t look promising. Events in the region suggest that White Nile had seen the writing on the wall insofar as its investment was concerned.
The Army digs in
The Sudanese army recently reinforced its presence in South Kordofan, a region bordering Darfur, in what the Khartoum government says is a preventive measure against the rebel group of the Justice and Equality Movement (JEM).
Ominously, an army spokesman last week said military forces began moving into the oil-rich region but did not disclose if JEM posed a direct threat.
The announcement came days after southern Sudan officials accused the north of building up a large force in South Kordofan, saying the deployment violated the terms of the 2005 peace deal that ended 2 decades of north-south civil war.
That won’t end Sudan’s oil business, as indicated by PetroChina, which has just completed a crude oil import terminal at Qinzhou.
The terminal feeds PetroChina’s 10-million-ton-capacity refinery at Qinzhou, which is designed to process crude oil from parent China National Petroleum Corp.’s overseas oil projects—among them, Sudan.
