The future of Sudan's oil production in the coming years is worse than of South Sudan, but both countries will face a decline in oil production after 2016. The Business Monitor International in its newest energy report outlook is most pessimistic about the possibilities for Sudan.

It says in its Oil & Gas Report Q1 2014  today (Thursday):  “Despite ambitious plans and the start of small fields in Sudan, the upstream outlook is even more bearish”. The Business Monitor International concludes: “We continue to view South Sudan as more prospective than Sudan, although we highlight there may be sizable untapped reserves in the Red Sea, where Khartoum has been pushing operators to accelerate their exploration activities. South Sudan had some progress on this front, with Total, joined by new partner ExxonMobil, reportedly planning to restart exploration on Block B”.

The oil monitor is not convinced the long-standing tensions between Khartoum and Juba has been resolved because a new border and security issues could again interrupt the flow of South Sudan's oil. It expects a strong rebound in production in 2014-2015 notwithstanding elevated political risks, but the longer-term outlook is pessimistic expecting that the output from South Sudan's key oil producing blocks to head lower from 2017.

“We expect combined output to average 220,000 barrels per day (b/d) for 2013, rising to 370,000b/d in 2014 as production continues to recover. However, this number factors in delays and challenges as production rebounds from the shut-in over 2012. Yet the medium- to long-term outlook is less than optimistic, given that much of current production was sourced from ageing fields and the hasty shut down of wells in South Sudan may have damaged ultimate recovery rates.

The new oil report predicts a production at 472,000 barrels per day in 2016, and gradually decline from this date forward. Although there is upside risk to this outlook, with Sudan having brought online two small fields recently and major international oil companies expressing interest in restarting exploration in South Sudan, for now, The Business Monitor expects overall production to decline toward the latter end of the decade.

South Sudan export route

Critical to unleashing South Sudan's more substantial hydrocarbons potential will be more reliable export routes, upon which future upstream investment will depend. South Sudan could see progress on this front. In sign a recent deal to construct a pipeline, the Presidents of Kenya and Uganda outlined their commitment to link fields in South Sudan to the port of Lamu. This would give operators the certainty that their crude could reach markets.

However, in the near-to-medium term there is cause for concern regarding the production profile for fields in South Sudan, which may themselves begin to decline. This could leave combined output for Sudan and South Sudan in a downward trend toward the tail end of our forecast period. For South Sudan, the key upside risk to the reliability of exports rests with Juba's continued pursuit of export options independent of Khartoum's pipelines.

The report is assuming an OPEC basket oil price for 2013 of US$105/bbl  falling to US$102/bbl in 2014.

No gas expected

"We continue to forecast no gas production or consumption, with plans for  uncertain. Efforts to capture associated gas and bring gas production online have shown little momentum despite previous government targets."

File photo (UN video)