Avoiding 'Costly Paraphernalia'

After tests on the crude at the Unity, Heglig and Talih oil fields in mid-1994, technicians contracted by Arakis' wholly-owned subsidiary State Petroleum drew more positive conclusions about the technical and economic viability of developing the fields than Chevron had done. Chevron had reckoned that the waxy crude oil from these sites would need to be diluted with naphtha or light oil in order to be transported. Arakis, which Energy Compass described as 'trawling for money' to develop the sites, claimed that a high-pressure pumping system could obviate the need for such 'costly paraphernalia', thus halving the cost of starting the extraction project to $400 million. Instead of a twin pipeline, a single pipeline would suffice.

'State's contracted analyst, Dwayne Rasmussen, insists there is a cheap way to handle the high level of wax. To counteract its tendency to solidify once exposed, Chevron had proposed an expensive system comprising a heat-treater and a second pipeline from the coast over 1,400 km away to carry a light oil diluent. Claiming no need for such a system, Rasmussen says the crude does not weather (solidify) if pumped under pressure with the associated gases 'kept in solution'...'
(Oil Energy Compass 13 September 1994)

Chevron's sampling of the oil was done in Texas, 'when the gas element which inhibits the weathering process was taken out: Arakis conversely tested the crude keeping the gas in.' Nonetheless, Chevron sources were said to be sceptical of the proposed new system. If the gas and oil mixture suffers a pressure drop - from a rupture in the pipe - the result may be like taking the top off a shaken bottle of fizzy drink, said one chemical engineer.

John McCleod, a former Amoco oil field engineer, and a Canadian-Pakistani businessman, Lutfur Khan, the founder of State Petroleum, set up the project after acquiring the fields for a 'negligible' sum from the Sudanese Concorp company, after Chevron relinquished its concession in 1992.

Arakis made some progress in convincing a consortium of European banks of the technical merits of its project, but it remained unable to persuade them that the political risk was sufficiently low to justify financing. It retained Goldman Sachs for financial risk management and Strand partners for financial advice, and took out a three-year political risk policy with Lloyd's of London.

'But what the banks really wanted was reassurance that the project would not be endangered by the conflict in Southern Sudan or by US trade and diplomatic restrictions.'
(Energy Compass Weekend Review 23 September 1994)

The 28-inch pipeline will have a capacity of 250,000 b/d, and initial throughput of 150,000 b/d. Spare capacity may be used by later field developments on the consortium's blocks, or by third parties. This will enable the project risks to be spread more widely but will require more pumping stations. Talisman says a total of 12, rather than the currently installed seven, will be needed.

The paraffin-based crude was originally thought to be so viscous that it needed to be diluted or heated to keep it flowing freely. Its "pour point" was said initially to be 36oC. More recent statements have compared the Nile Blend crude with Libyan or Saudi products instead of China's heavier Daqing crude, and given a pour point ten degrees lower than before - but this is not confirmed and is commercially sensitive.

The pumping will be greatly affected by the viscosity: the thicker the oil, the more energy it needs to propel it. The pipeline is mostly buried, and relies on ambient heat from the ground remaining above the pour point. If it cools below that for too long, there is a risk of the pipe seizing up. In the Red Sea Hills, winter temperatures can drop below zero..

Sceptics said a sizeable and costly programme of water injection into the oilfields might be necessary early on, because the gas:oil ratios are low and there is a lack of natural water drive.

Not only does the high viscosity of all the oil found so far require higher investment in the pipeline than low-viscosity grades, it also costs more to process: the equipment for vacuum distillation is more expensive than ordinary distillation equipment. In the refining stage, more chemical cracking steps are required to convert the long chain hydrocarbons into short chains. The facilities to do this require more money. If it is not done, the result is more waste.

Initial testing of the 50,000-b/d refinery at Jayli, a joint venture with China National Petroleum (CNPC) at a cost of $600 million, slated for completion by the end of 1999, was held up until March 2000. Its technical specification was not available.

The $335m contract to supply pre-coated steel pipe and gathering lines was awarded to China and Germany. Over 1100km of the 1600km of pipe is provided by China. The remaining 500km of the pipe has been supplied by Germany's Mannesmann. The technically more sophisticated Mannesmann pipe will be used at key stages.

Parts of the route through the northern desert and the Red Sea Hills are notoriously rocky and difficult to excavate. The pipe will be exposed to fluctuating extremes of heat and cold in the desert atmosphere. Better quality pipe is needed in these sections to survive the thermal stresses of expansion and contraction.

The pressure inside the pipes is highest near the pump stations, and these sections also need the strongest pipes.

The pipeline will be exposed to ground movement, from flood erosion, for example, as well as organised attacks. Breaks could occur anywhere, and safety features are needed all along the route.


Oil started being pumped into the pipeline on 31 May 1999, when the Sudan government was predicting firmly that oil exports would start on 30 June. So the time available for the oil to reach the Red Sea was 30 days. But as the calculations below show, with current pumping capacity it needs 107 days for the oil simply to fill the 1610km pipe, before it can come out of the other end. So was this repeated claim just another part of the talking-up of the project?

Oil production is initially expected at a rate of up to 150,000 bbl/day
1 barrel = 0.1589873 cubic metres, so volumetric production is 23848.1 cubic metres per day.
Velocity = volume / area of flow
Area of flow = pi * d * d /4 (where d is the diameter of the pipeline in metres = 28 inches = 0.71 m, and pi = 3.14)
Velocity = 23848.1 / (3.14 * .71 * 0.71 / 4) = 15007.9 m/day = 15.01 km/day
The number of days needed for the oil to fill the pipe and travel 1610 km, therefore, is 1610/15 = 107 (to the nearest day).

Argentina's TECHINT International Construction put in winning bids for the work on the Port Sudan marine terminal, pumps and SCADA, Arakis announced on 13 January 1998. Canada's Denim Pipeline Construction Ltd (Calgary) and Roll'n Oil Field Industries (Calgary) were contracted for some of the oilfield and pipeline work.

Arakis Energy announced on 13 January 1998 that supply contracts for the pumps and drivers were awarded to Weir Pumps Ltd of Glasgow, Scotland, and for generators to Allen Power Engineering Ltd, England. Since Talisman's takeover from Arakis, seven pumping stations have been built in Britain, using Allen Power's ship-sized engines in Weir's pump housings, and incorporated at key stages along the pipeline. (A total twelve pumps are needed for upgrading it.)

Britain is seeking to keep its options open on Islamist politics, perhaps fearful of the prospect of an Islamist takeover in Saudi Arabia in the future. Its officials often speak of the need for "constructive engagement" with Sudan's National Islamic Front, and of their apparent conviction that exposure to trade and decent western values will somehow lead the NIF leaders to moderate their behaviour. Since Dr Turabi already has an impeccable western education, this seems a forlorn hope.

"Sudan's independence was NOT achieved through self-determination, and it is largely due to the Foreign Office that the process of self-determination was first circumscribed and then circumvented... This act of political expediency has haunted the Sudan ever since, and this is one reason why very many Sudanese insist that Britain has a continuing responsibility in helping to resolve the current war."
("Dear Minister - What you need to remember about the Sudan", Prof. Douglas H. Johnson's open letter to Derek Fatchett in Parliamentary Brief, March 1999)

Providing the pulse of the pipeline

The bulk of the pipeline equipment is provided by China. While cheap, such equipment tends to be less reliable and lower in technical specification than western-manufactured goods, so one-third of the line-pipe, all seven pumping stations and other key parts have been bought from Britain and Germany.

Nothing could be more vital than reliable pumps - providing the heartbeat of the project, keeping the oil flowing through the pipe - and when US sanctions prevented the purchase of American equipment, two British companies landed multi-million pound contracts. For Weir pumps of Glasgow it was probably their biggest ever.

The contracts were signed in February 1998, when the already-discredited Arakis was still in the driving-seat of the project, yet there is no sign of any concern from the British government at the deal or its implications.

Like Germany's Mannesmann, it seems Weir and Allen got a good deal - a quiet bonanza, even. They've been paid in full - one of the project's few hard-currency expenses, the bill for the pumps is estimated at around $50m - and have nothing to lose if the project is sabotaged or collapses. Indeed, they could profit more from the conflict around the pipeline than if it ran smoothly.

The role of the British companies is not just to supply the hardware. Weir have also trained Malaysian and (NIF-approved) Sudanese mechanical engineers in Scotland. Then there are the maintenance contracts. If the existing pumps and generators break down or are attacked, who will replace them? Each pump station is the size of a small house, making it a prime target on the pipeline route, and a replacement reportedly takes three months to complete.

Always look on the bright side of life

In Sudan's case, oil barrels are as central to the war as gun barrels. Yet the British Department of Trade and Industry (DTI), in a July 1998 report, sees Sudan's oil project with uncritical optimism as a "tremendous opportunity", a view which has not openly been challenged by Robin Cook's Foreign and Commonwealth Office (FCO) or Clare Short's Department for International Development (DFID).

The DTI report was released six months after the two UK firms signed multi-million pound contracts for the pipeline pumping equipment with Arakis.

"Oil prospects are good, with the Government of Sudan expecting production for export once the pipeline is complete.

"Considerable outside investment and the importance of oil for the current government's hold on power make completion of the pipeline likely and the government have committed considerable resources into protecting the oil fields from rebel attacks.

"If you would like to learn more about how your company can get involved you can commission a Tailored Market Report to assess the potential for your product or service in this exciting sector."

(DTI "Sudan Oil Sector Report", July 1998)

The DTI's apparent enthusiasm must mean that Weir and Allen Power Diesel can claim to have played according to the rules, and would no doubt be offended by allegations of complicity with the war aims of a totalitarian regime.

The DTI's July 1998 Sudan Oil report gives no hint of the claims of fraud that were already raging around Arakis' involvement, suggests that the government has the oil fields under control, and makes no reference to the hazards of doing business with the NIF government. (This is surprising, not least since export credit guarantees would not be issued for Sudan because of the financial risks involved.) Any businessman unprepared to face repeated and abrupt changes in foreign exchange regulations and other laws, in a weak and chaotic legal system dominated by religious zealots, will find no preparatory warning of them here.

The DTI report conveys no picture of what the money will be used for, and makes several errors of fact and omission. It asserts, for example, that Nimeiri's introduction of Sharia law halted Chevron's exploration. It did not. Chevron stopped because of the accelerating civil war, which re-ignited several months before the September 1983 introduction of Sharia, and because of operational frustrations and a changing financial picture.

There is no discussion about the viability of the pipeline; no information is given about the nature of the crude oil, especially with regard to the operational requirements of the pipeline, and there is no discussion about the nature and technical capabilities of the refineries and their efficiencies. The latter point is important, in view of British obligations under the international agreements it has signed on the reduction of carbon dioxide emissions and other environmental considerations.

Why such encouragement for British companies to invest in a country which is fomenting ethnic wars, and where there is no law to protect citizens from the excesses of the security forces? How is it that the proximity of the war zone to the oil fields, the complexity of militia in-fighting, and dangers to the pipeline are all played down?

The report was withdrawn for a re-write in August 1999, at the same time as the parliamentary select committee on international development issued a damning criticism of the failure of the three British ministries - DTI, Foreign & Commonwealth Office (FCO) and Department for International Development (DFID) - to ensure that considerations of human rights, the environment and conflict were adequately taken into account in trade deals.

"The British Queen Elizabeth has declared her sponsorship to the Sudan Call to rehabilitation of the Gezira Scheme, on ground that Britain was the founder of this scheme," the Chairman of the Sudanese Businessmen Association, Izz-Eddin al-Sayed, told the Sudan News Agency (SUNA).

The Association "is exerting serious efforts for enhancing Sudanese-British relations" and "contributing effectively to solution of Sudan's national problem via its relations with equal foreign unions, such as the French, Belgian and German businessmen chambers. It is also realizing development and transporting the Sudanese petroleum."
(SUNA 26 April 1999)


After the American missile attack on El-Shifa factory in Khartoum in August 1998, Germany's Ambassador, Werner Daum, dismissed as "impossible" the US' allegations that the pharmaceutical plant had been used in the manufacture of chemical weapons.

The signing of a contract with Germany's Mannesmann Handel conglomerate to provide 500km of the line-pipe - 30% of the total length - went through in November 1998 with no apparent fuss.

Mannesmann holds 1/3 of the EUROPIPE consortium (one-third is held by British Steel and the remaining third by a French company). Europipe sold the pipeline-tubes to the Chinese company that is actually building the pipe-line. Mannesmann, an engineering giant, is also extensively involved in electronics and mobile telephones.

European companies are not known to be involved in the construction of the pipeline. Mannesmann's business ends at a German port.

Nonetheless, Energy and Mining minister Dr Awad al-Jaz visited Germany on the invitation of a number of German companies which expressed desire to invest in Sudan in different fields, and said that a German delegation was expected to visit Sudan shortly in this regard. Dr Al-Jaz "hoped that the relations and cooperation between Sudan and Germany would witness further consolidation for the interest of the two countries," said the Sudan News Agency.


The oil discovery made by the French Total oil company was once thought more significant than that of Chevron's Unity field. Total (now TotalFina) is still waiting in the wings.

At the beginning of the 1980s, France's Total gained exploration rights over two prime tracts in Southern Sudan. These were the so-called "Papyrai" block in Bahr al-Ghazal province - adjoining Block 4 and Block 5A - and a bigger swathe further south in the Bor Basin, Block B, stretching down towards Juba. Its partners in Sudan at that time were US Marathon Oil and the Kuwait Oil Exploration Company. While Chevron was taking public flak in the arguments over the siting of the pipeline and refinery, Total kept a low profile. Although it was forced to suspend its onshore operations in 1985 as the civil war intensified, in the 1990s it has retained the rights to its concessions, and continues to wait in the wings while Canada's Talisman is dragged into the public arena.

Following its 1999 merger with Belgium's Fina, Total said on 1 October that it was planning to return to Sudan. Its Director for East Africa Exploration, Thierry Monmot, said operations would initially focus on its existing concession, the 170,000km2 Block B, where it had carried out seismic surveys in the early 1980s. It has "a huge potential" for oil production. Sudan is keen to offer TotalFina the possibility of acquiring another tract, and TotalFina has bid for another concession over Block 5.

France sees an opportunity to stake an early claim for French companies in mineral and petroleum extraction in Sudan. Its colonial rivalry with Britain is still in evidence, and with little confidence in US policy on Islamism in the 1990s, Paris has been building its own strategies and contacts. It tried using Khartoum to open a dialogue with Algeria's Islamic Salvation Front (FIS). Hassan al-Turabi promised mediation in the Algerian conflict, when he presented himself as a "moderate" fundamentalist with whom they could do business, - but failed to deliver.

France was said in 1994 to be using Sudanese security to put pressure on Egyptian and other Islamists not to disrupt the Palestinian-Israeli peace talks: "Arms and economic goodies may be involved," said Africa Confidential.

Even in February 1994, when France protested to Khartoum about its southern military offensive, secretive meetings in Paris were being reported between Sudanese generals, led by head of external security Hashim Abu Said, and French counterparts. The Sudanese opposition feared that the French counter-espionage service DGSE wanted to cooperate with Sudan over Chad and Central African Republic.

During visits to Paris in August and October 1994, Turabi urged the French to resume involvement in oil exploration, and when Arakis launched its pipeline plans, oil industry sources commented that Total might try to "piggyback" on Arakis, to reduce its costs by using the pipeline.

In October 1998 Total expressed renewed interest in participating in the next round of bids for development blocks. In September 1999, on a European tour, Energy Minister Awad Eljaz met with TotalFina officials in Paris and asked them to resume work on their permit in southern Sudan, also offering them further prospecting rights on Block 5. TotalFina executives accepted the minister's statement that safety in Sudan "seemed to be improving" and decided to send a mission, accompanied by Sudanese officials, to verify the situation in Bor.

"In order to really check the security situation in the region, the mission ought to go overland to Bor, at least from Kosti, for if it travels by air, the trip will be totally useless, " warned Indian Ocean Newsletter, which noted: TotalFina executives seemed all the keener to examine Sudan's offer of new permits, since the financial conditions Awad Eljaz has proposed seem to be more acceptable than those offered by deputy minister for energy and mining John Dor in July.
(Indian Ocean Newsletter 11 September 1999)


As a reward for its co-operation in the seizure of the ageing terrorist Carlos in Khartoum in 1995, France gave the National Islamic Front government its satellite photographs of the Southern war zone.

And in October 1999, Michel Porta, chairman of Aéronautique et Systèmes, was facing charges of "the unlawful export of war material" to the Sudanese regime in September 1994. An allegedly illegal $3million deal went through six weeks after Carlos had been captured.

Porta, aged 57, is accused by French customs of orchestrating the sale of five unmanned aircraft intended to allow the Sudanese Army to survey rebel positions in the south of the country. M Porta claims the drones were for civilian use. The prosecution says the drones were virtually identical to a model developed by the French firm Sagem for military use.
(The Times - London October 16 1999)

 Jonglei and Juba

In addition to oil interests, French companies were involved in two major projects in southern Sudan which stalled because of the civil war: the part-completed Jonglei canal and the Juba international airport. Both France and Sudan still hope that work can eventually restart on the two projects.

'The Jonglei canal, 350km long, was being constructed with the world's biggest digger by the French company Grandes Travaux de Marseilles (GTM). Abandoned since 1984, the $50m digger is now a useless heap of rusting remains, but GTM has said it is determined to finish the job in Sudan. The canal is equally important to Egypt since it would increase the Nile flow by 2bn cubic metres of water a year...'
(Africa Analysis 19 August 1994)

Ariab, a French mining company, has been taking out around 50 tonnes of gold per year from the Red Sea Hills for the past several years - generating total income equivalent to the value of a couple of oil tankers.
 THE TRADER - Trafigura

On 1 August 1999, Sudan confirmed the signing of a three-month marketing deal with Trafigura Beheer BV of the Netherlands and London. Trafigura is one of a limited number of "world class" oil and physical metals commodities trading firms. It also does business in oil trading with Iraq - exporting Iraqi crude to Europe and/or the Far East - and in oil trading of South American crude. (www.vitrade.com)

Oil and physical commodities trading companies such as Trafigura make their money two ways - from the margins of buying and selling large quantities (super-tanker size quantities) of crude oil, and from the freight and "handling" fees of the physical aspect of the transactions. The company has to be an expert in shipping regulations and fees (they often line up the ships from port) as well as trading on a minute-by-minute basis.

A typical cargo of oil can easily change hands half a dozen times from the time it leaves the Middle East to before it arrives at its ultimate destination. Trafigura is just one of the many traders willing to buy, sell and speculate on the value of that oil cargo. They have won the bid for the initial marketing of the crude oil from Sudan to "the world" (anyone with enough cash to buy the cargo). They will have to use their network of worldwide contacts to sell the cargo to the highest bidder - and then, in this case, probably just take a fee (percentage) of whatever they get from selling the cargo.

Two Indian firms, Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC) have expressed interest in Sudan. IOC and ONGC plan to continue and expand operation on already developed fields in Sudan.
(SUNA 18 April 1999)

In the early 1990s Tehran supplied Sudan with arms and ammunition, a $17m loan, and agreed to write off a $150m loan given to Nimeiri by the late Shah. In September 1990 the Iranian president declared his support for Sudan and described the war in the South as a "holy war".

In December 1991 two Iranian ships loaded with road-building equipment arrived after a visit by President Rafsanjani, his Defence Minister, Foreign Minister, Construction Minister, Trade Minister, Information Minister, and Budget and Planning Minister. Iran denied reports that it was enlisting Sudan's help in providing new bases for Hezbollah, and said it simply wanted to invest in Sudan. Rafsanjani might have been sincere in trying to establish relations, but other Iranian institutions might have had their own agenda.

Iran financed a $260 million arms agreement with China, by which Khartoum obtained 18 F7 and F8 fighter aircraft, 140 Chinese T-54 and T-59 tanks and 20 T-70s, and 270 armoured personnel carriers, plus multiple rocket launchers and artillery. Its National Petroleum Corporation came in.

An agreement was made to provide Sudan with oil and oil-based products, agricultural and medical machinery and electrical equipment, in return for meat, edible oils and sorghum. Iranian help was offered in building a radio and television station capable of broadcasting to neighbouring countries, in addition to "all requirements for the implementation of 'sharia'."

But Iran is above all pragmatic and keen not to jeopardise its trade links with the west in the face of pressure to reduce its international Islamist connections. Some in the Iranian government see no benefit in dealing with a beseiged and isolated Sudan, also not wishing to jeopardise relations with Egypt and the Gulf States.

Beginning to distance itself from Khartoum, Iran has baulked at providing potentially limitless petroleum/gasoline for Sudan, which has continued to suffer periodic acute shortages. The amounts of money for military support are also limited: Iran is not writing a blank cheque.

Iran has nonetheless provided considerable help in training Sudanese security personnel and advising the NIF how to neutralise the threat posed by the (traditionally anti-NIF) regular armed forces by setting up parallel institutions. Sudanese officers were trained in Iranian academies, especially that of the Iranian Air Force, supervised by Chinese and North Korean advisers.

Iran has been involved in several public works construction projects in Southern Sudan which have been alleged to be cover for military assistance. However, despite SPLA and NDA claims that Iranians have been fighting in the South, no prisoners or bodies have ever been produced.


In 1991, Sudan opposed the US-led military coalition to flush the Iraqi army out of Kuwait. Sudan's stance was inevitably seen as hostile by Kuwait and the other oil-rich Arab states including Saudi Arabia, and rapprochement with them was slow and uncertain during the rest of the 1990s.

Iraq is also sharing its expertise in developing Sudan's oil resources. An agreement was signed in 1995 to build an oil refinery in Sudan, and teams of Iraqi workers have been sent to Sudan from Baghdad. One group of Iraqis hijacked an aircraft that was returning them after working in Sudan: on arrival in Britain they claimed their lives had been in peril.

In July 1997, then-Finance Minister Awad al-Jaz was in Iraq to develop an oil accord on exploration, refineries and training of Sudanese in Iraq. The Sudanese opposition and Uganda claim that Iraq has used Sudanese territory to build chemical weapons plants in Wau and sites close to Khartoum.

On 8 April 1999, Awad al-Jaz (now Minister Of Energy and Mining) met with the Iraqi ambassador and 'praised Iraq's permanent support for the Sudan, particularly the country's oil project via training the Sudanese technicians in the Iraqi institutes.'
(SUNA 8 April 1999)