Sudan is no longer a destination for oil companies, nor do its oil fields attract many of them the way they did for decades.
In fact, the dire security conditions the country has endured since fighting erupted between the army and the Rapid Support Forces have driven these companies away and have been the principal reason for the halt in production, transport operations, and the refining industry.
The latest company preparing to leave is the China National Petroleum Corporation (CNPC), Sudan’s strategic partner since 1995. In an official letter to the Sudanese government, CNPC expressed its intention to end its investments and discuss an early termination of the Production Sharing Agreement and the crude oil pipeline agreement for the “Bilila” field in Block 6 in West Kordofan State.
The company stressed the need to terminate both agreements no later than December 31 of this year due to “force majeure” conditions, a reference to the deteriorating security situation.
The field is operated by Petro Energy, a joint venture between CNPC and Sudan’s state-owned Sudapet.
Declining Production
In recent years, Sudan’s oil operations have faced serious challenges even before companies decided to withdraw. Production at the Bilila field had already fallen from its peak of 70,000 barrels per day (in September 2021) to about 14,000 barrels per day after fighting between the army and the Rapid Support Forces began in April 2023.
As the fighting continued, operations and production came to a complete halt on October 30, 2023, after Block 6 suffered repeated acts of sabotage and theft, as well as an attack on Bilila Airport.
The Chinese company’s letter attributed its termination request to the collapse of supply chains, the unavailability of equipment, and financial losses caused by the absence of revenue while expenses continued — making a resumption of production impossible until the armed conflict cease.
Security and Debt
Joshua Meservey, Senior Fellow for African Affairs at the Hudson Institute, believes that the Chinese company’s withdrawal reflects Beijing’s concern over the deteriorating security situation inside Sudan and fears that its oil operations there could be put at risk.
But oil and energy journalist Dr. Hasbalrasoul Mohamed Saad argues that several key factors accelerated the company’s decision: “the approaching end of the 25-year contract term; the security complications Sudan is now experiencing; and the economic conditions. He adds that “Sudan continued to consume domestically produced oil, including the partners’ share, to meet national needs — which caused its debts to pile up.”
This meant that “Sudan was unable to settle its debts to China, estimated at around two billion dollars, adding an unsustainable financial burden to the Chinese partner.”
Regional Implications of the Withdrawal
The consequences of China’s decision extend beyond Sudan’s borders. The shutdown of operations at Bilila affects South Sudan’s oil output as well, because the area contains a central processing facility used to process and export 130,000 barrels of oil from Unity State in South Sudan through Sudanese territory.
Although most major Chinese oil investments shifted to South Sudan after its 2011 independence, Beijing’s withdrawal leaves a vacuum.
Meservey believes this may open a window of opportunity for other competitors — such as Russia or other states — to fill the gap, although the withdrawal could be just a “strategic freeze” while China waits stability. While China is known for its high tolerance for risk in Belt and Road projects, he notes, “the events in Sudan may have exceeded even that high threshold.”
Economic Consequences
China’s withdrawal is a heavy blow to a country already facing a severe energy crisis. The Undersecretary of Sudan’s Ministry of Energy and Oil, Dr. Mohy El-Din Naim, estimated that Sudan has lost more than seven million barrels of oil due to the war.
With the country’s four main refineries — including the 1.2-million-barrel-capacity Al-Jaili refinery — damaged or taken offline due to the conflict, oil production has plummeted. These successive blows have led to soaring inflation, a sharp depreciation of the currency, and worsening food insecurity threatening nearly 25 million people.
In this context, Saad explains the direct impact of the field’s shutdown on Sudan’s need for petroleum products: “Oil production has dropped from approximately 70,000 barrels per day to about 14,000 barrels.”
Even so, Saad downplays the negative economic fallout of CNPC’s departure, noting that production in the field where the company operates had already ceased entirely.
