Sudan: Oil Spurs Investment

U.S. business interest in Sudan has been picking up—particularly since a U.S. oil company, Chevron, found oil in commercial quantities there just three years ago. Businessmen believe that oil may eventually do a great deal to stabilize that country's debt-ridden economy.

Late this year, Chevron will construct 900 miles of twin pipelines (one for the heavy crude and the other for its dilutant) from the Unity and Heglig fields in south central Sudan to Marsa Nimeiri, the export terminal to be built south of Port Sudan on the Red Sea. The projected cost is $1 billion for an initial flow of 50,000 barrels a day, with a capacity of up to 100,000 barrels a day. The overall project, scheduled for completion at the end of 1985, is controlled by the White Nile Petroleum Company, whose equity is shared by the Sudanese Government, Arab Petroleum Investment Corporation, International Finance Corporation (IFC) and Chevron. At the same time, Texas Union and Texas Eastern are also prospecting for oil near the Red Sea while a new company, African Drilling Company (ADC), has been established as a joint venture between Sudan's Military Commercial Corporation (30 percent) and Blocker Energy Corporation of the United States (70 percent). If these companies share Chevron's success, Sudan could become self-sufficient in oil by 1990. Currently, since last December, Saudi Arabia supplies 80 percent of Sudan's domestic needs with a largesse of 100,000 tons of petroleum products a month valued at $23.8 million, tied to a soft loan package reportedly arranged by the Faisal Islamic Bank in Khartoum.

But the main thrust of U.S. and other foreign investment continues to be in Sudan's potential to become the "breadbasket of the Arab world." Saudi Arabia, Kuwait and other Gulf nations continue their leading investment role through the Arab Authority for Agricultural Investment and Development (AAAID) set up in 1978. In 1982, Saudi Arabia set up a $2 billion "integration fund" for joint Sudan-Egypt ventures in agriculture.

Earlier this year, U.S. AID's Bureau for Private Enterprise (PRE) sent a reconnaisance mission to Sudan, which was followed by a more recent visit by one of its consultants to the Sudan Rural Development Corporation. Also, the Sudan-U.S. Business Council of the U.S. Chamber of Commerce is working on the concept of a private investment company which could identify potential agribusiness projects in Sudan. PRE, American and Sudanese businessmen are expected to finance the company.

Agribusiness Successes

To date, there have been two American agribusiness successes in Sudan:

Tenneco Inc. (Houston) is operating a model farm on its lease of 5,000 acres in the north. It hopes to extend its expertise to other farm cooperatives in the area and help build up an adequate transport system to market products to Egypt.
Arkel International, Inc. (Baton Rouge) has an ongoing technical management contract with Kenana, one of the world's largest sugar projects. Target production of 300,000 metric tons of sugar is expected to be achieved in April, 1984, when test marketing is also slated. Export to Saudi Arabia and other Arab countries is expected in 1985.

Possible upcoming U.S. projects include:

A barge transport system on the Nile to facilitate transport of agricultural produce between the North and South. Crowley Maritime, a San Francisco-based tugboat company which recently acquired Delta Lines, is studying a project.
A livestock station and an agricultural export network to the Gulf. East-West Group (Washington, D.C.), an investment banking firm with $21 million already invested in Sudan, is studying the projects. East-West's most recent venture is a groundnut processing plant for export of edible oil and byproducts.

Increased U.S. business interest is also evidenced by a rise of U.S. exports to Sudan to a record $270.1 million in 1982, facilitated largely by AID commodity programs. The U.S. AID Sudan commitment requested for 1983 is $200 million.