Watching Government

The U.S. government may have given U.S. firms wanting to do business with Sudan conflicting signals in the past, but now the answer is clearly "no." Sudan is one of seven nations the U.S. has accused of sponsoring terrorism. The State Department says Sudan was involved in the attempted assassination of Egyptian President Hosni Mubarak in Ethiopia in 1995 and charges it supports Islamic terrorist groups.

April 7, 1997

3 min read

Signals on Sudan

The U.S. government may have given U.S. firms wanting to do business with Sudan conflicting signals in the past, but now the answer is clearly "no."

Sudan is one of seven nations the U.S. has accused of sponsoring terrorism. The State Department says Sudan was involved in the attempted assassination of Egyptian President Hosni Mubarak in Ethiopia in 1995 and charges it supports Islamic terrorist groups.

Through an executive order, the Clinton administration has imposed commercial sanctions on five of the seven nations (Cuba, Libya, Iran, Iraq, and North Korea) but not on Syria and Sudan. It explains that Congress has not specifically imposed restrictions on those two.

Last year the Clinton administration may have misled Occidental Petroleum Corp. about its position on Sudan-as it did Phillips Petroleum Co. on an Iranian investment a few years ago.

Oxy's deal

Oxy was considering participating in a Sudanese oil field development, prompting allegations that the administration had granted it an exemption.

Both denied those allegations, but Oxy also dropped the project.

Rep. Bill McCollum (R-Fla.) has filed a bill to clarify the situation. It would halt all commercial dealings by U.S. firms with the Sudanese government.

And Jesse Helms (R-N.C.), Senate foreign relations committee chairman, was concerned enough to meet with administration officials on the subject. His panel is expected to hold hearings this month.

In January, Secretary of State Madeleine Albright declared the U.S. will seek to obtain new United Nations sanctions against Sudan: "We will continue to insist that Sudan desist from supporting terrorist activities."

Last year, the U.N. Security Council imposed mandatory diplomatic and travel sanctions against Sudan after it declined to extradite three suspects in the Mubarak assassination attempt.

Potential seen

Although U.S. companies seem to be barred, oil firms are enthusiastic about Sudan's potential. They say southern Sudan's oil reserves could be more than 3 billion bbl.

A 14-year-old rebellion in Sudan has done much to hamper development, because rebels consider oil company installations an extension of the Islamic government and thus legitimate military targets.

Gulf Petroleum Co. of Qatar recently said it will begin exporting small volumes of crude, about 2,500 b/d of low sulfur oil, from the Adar Yel fields (see map, OGJ, Feb. 24, 1997. p. 37). It is trucking the oil to Port Sudan. GPC plans to quadruple production from the current 2,500 b/d by yearend.

Several firms plan to build a 250,000 b/d export pipeline from the Heglig field area 932 miles to Port Sudan by 1999.

Two Canadian firms are active in Sudan: IPC Sudan Ltd., a unit of International Petroleum Corp., Vancouver, and Arakis Energy Corp., Calgary.

Oil exploration is so vital to Sudan's interests that when the government signed concession agreements last month with China National Petroleum Corp. and Petronas of Malaysia, it held the ceremony in a live broadcast on national television.