Daily News  :: North Africa

China Sudan's biggest foreign investor
Mohamed Hasni
Published: 02-NOV-06

Khartoum - The opening by Sudan of its doors to China has paid dividends, with its economy booming thanks to oil revenues and Khartoum counting on Beijing's support for its refusal to allow a United Nations (UN) force in Darfur.

With American and European companies staying well away from Sudan due economic insecurity and a US embargo, Khartoum decided to turn to Asia for commercial partnership, an initiative driven by former foreign minister Mustafa Othman Ismail, now presidential adviser.

"This policy was the right one because it allowed us to extract petrol, to transform the area and acquire the technology," Ismail was recently quoted as saying. "We have this way managed to bypass the American embargo."

As US and Canadian firms who had been developing Sudan's hydrocarbon and mineral riches, left a country torn by civil war, Asian companies came rushing in, breathing new life into an economy that once relied mainly on agriculture.

In 1996, state-owned China National Petroleum Corp, formed a consortium with Sudan's national petroleum company, as well as Malaysian and Indian firms and the Greater Nile Petroleum Operating Co. CNPC retains 40 percent of the shares of the consortium.

In August 1999, the first shipment of Sudanese petrol arrived in Singapore and, since then, CNPC had dominated the Sudanese oil industry.

Sudan currently produces around 500 000 barrels a day, most of which was exported to China, now the African country's main commercial partner.

"In 2005, total exports to China reached $3.4bn and our imports were at $1.3bn, making it an essential part of our international commerce," Abdel Aziz Abu Taleb, a senior official at the foreign trade ministry said.

"China is our main commercial partner and the largest investor in the petroleum sector," with investments of up to $7bn, Abu Taleb said.

Sudan, whose crude oil reserves were estimated at 563 million barrels, boasts largely untapped resources, including significant gas reserves. In 2005, growth rates reached 8 percent, albeit from a low base, and were expected to reach double figures, observers have said.

Despite criticism from human rights organisations, who charge that oil revenues were used to buy weapons in a country faced with rebellion, Khartoum has enjoyed a major face-lift in recent years, foreign residents have said.

Infrastructure projects were being completed and real estate was on the rise in the capital, where six million of the 30 or 40 million Sudanese reside.

The privatisation of a number of public companies, in the banking and telecommunications sector, has also attracted foreign investors, particularly from the Gulf. The commercial relationship with China also benefited Sudan politically.

Khartoum has counted on Beijing's influence in the UN Security Council to prevent the deployment of UN troops in the war-torn western region of Darfur.

The arid region erupted into civil war in early 2003 when the two groups rebelled against the Khartoum government seeking regional autonomy, prompting a scorched earth response from the military and its Janjaweed militia allies.

In August, the Security Council, of which China is a permanent member, passed Resolution 1706, which called for the deployment of 20 000 troops in Darfur.

Some 200 000 people have died and 2.5 million others been displaced during the three-year conflict.

But President Omar al-Beshir has repeatedly refused international troops, describing any such presence as an "occupation" of his country. Beshir was due to attend a key African summit in Beijing which kicks off November 3. Sapa-AFP

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