Blaue Reihe - Deutsche Gesellschaft für die Vereinten Nationen eV

Sudan‘s oil: A blessing or a curse?
Nicolai von Hoyningen-Huene
The objective of this paper is to give a brief overview of Sudan’s oil industry. It will point out the economic
significance of oil for Sudan’s economy, elaborate on the major players in the oil business
and identify the countries that profit the most from Sudan’s oil exports. As oil is often associated
with the Abyei conflict, it will assess to which extent oil plays a role if any. Moreover, Sudanese
officials have lately considered building their own refineries and a pipeline to Kenya. This development
is worth a critical look. Ultimately, the paper looks for answers to the question whether oil has
been a blessing or a curse for Africa’s largest country.
What this paper will not cover: It will neither discuss the current negotiations between the North and
the South regarding the future sharing of oil revenues nor the economic implications for both economies
after the secession. It will also not give details about Sudan’s various oil fields and about
the different types of oil being produced. 1
The significance of oil for Sudan’s economy
Oil is Sudan’s most precious commodity representing over 95 percent of the nation‘s export revenues
in 2008. 2 The government in Khartoum as well as the Government of South Sudan (GoSS) are
heavily dependent on oil earnings. According to a study by the International Monetary Fund (IMF),
crude represented 98 percent of South Sudan’s total earnings while the North derived 60 percent
of its revenues from oil in 2008. 3 Once the export of oil started in 1999, high oil prices and significant
inflows of foreign direct investment made the economy boom until the outbreak of the world
economic crises when the oil price dropped and Sudan’s economy was badly hit. 4
While the South owns around 75 percent of Sudan’s currently known oil reserves, the entire transport,
refining, storage and export infrastructure lies in the North. 5 This has made the North and the
South interdependent.
Regarding the sharing of oil revenues, the Comprehensive Peace Agreement (CPA), which was signed
in 2005, stipulates that the North and the South equally share the proceeds of crude. How the
oil earnings are to be shared after the secession is still being debated about. 6
1 For a detailed overview see: U.S. Energy Information Administration. November 2010 (last updated).
Sudan Country Analysis Brief.
2 International Monetary Fund. July 2009. Sudan: Staff–Monitored Program for 2009-10. P. 26.
3 International Monetary Fund. July 2009. Sudan: Staff–Monitored Program for 2009-10. P. 4.
4 CIA World Factbook. Sudan. Retrieved on June 26, 2011.
5 Kron, Josh and Jeffrey Gettleman. June 10, 2011. Thousands Flee in Sudan as North-South Clashes
Grow, U.N. Says. The New York Times.
6 Sudan Tribune. June 22, 2011. ‘Sudan’s Bashir threatens to turn off oil pipelines.’
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