Sudan opens new pipeline; hikes output to 500,000 b/d

Sudan's oil output was due to rise to half a million barrels per day after a pipeline was opened pumping crude from the southern Upper Nile region to the Red Sea, an oil official said on Tuesday. The almost 900-mile-long (1,460-kilometre) pipeline -- inaugurated Monday -- will allow oil wells to start operating in the southern Melut Basin from which the crude will be pumped to Al-Salam port on the Red Sea, the official said. Sudan's production stood at more than 300,000 b/d and is now expected to rise above the 500,000 b/d mark, making Africa's largest country one of the continent's oil top heavyweights behind Libya, Nigeria and Angola. The launch ceremony for the pipeline -- initially due to have taken place last summer -- was held in the town of Fulouj and attended by Energy and Mining Minister Awad al-Jaz as well as several southern Sudanese officials. Sudan's north and south signed a peace agreement in January 2005, ending 21 years of war fueled by resentment over the northern Khartoum-based government's exploitation of oil resources, which are mainly in the south. A wealth-sharing agreement was among the hardest to reach during the negotiations for the comprehensive peace deal and sharp differences remain between Khartoum and the semi-autonomous southern government. The new pipeline is run by the Petrodar conglomerate, three quarters of whose shares are owned by the two oil giants operating in Sudan: Malaysia's Petronas and China's CNPC. The rest of the shares are split between Sudan's Sudapet, Dubai's Gulf Petroleum and Al-Thani, and Sinopec, China's other state-owned giant. China, the world's second largest energy consumer market after the United States, has its largest overseas oil production operation in Sudan and is eyeing more deals as the war-torn country's oil sector picks up. Some Sudanese oil officials have said in recent weeks that they hope to further hike total output to 650,000 b/d by the end of the year and have announced a target of more than 1.1 million b/d by 2010. Sudan has proven reserves of 563 million barrels of oil, with potential for more in southern regions which had been made inaccesible by conflict. Natural gas was also discovered offshore. The government of south Sudan, which under the north-south peace deal is supposed to receive a 50% share of the country's oil revenues, is expected to rake in US$1.3 billion in 2006.

Tapis hits record high of US$73.79/bbl on supply concerns

Asia-Pacific benchmark Tapis soared to an all-time high on mounting concerns about a shortage of supply in regional sweet crudes amid the spike in reforming margins and soaring gasoline demand.

Tapis scaled to US$73.79/bbl at Tuesday's Asian close, Platts' data showed. The light, sweet marker's previous record assessment was at US$72.04/bbl on January 23.

Worries about a smooth restart of crude output at Australia's NorthWest Shelf region following last week's shut-in due to Cyclone Hubert sparked the uptrend, which was aided by crude gains.

WTI and Brent futures were up between US$1.60-1.90 at US$69.38/bbl and US$69.59/bbl respectively, after a session of trending higher on the back of US media reports citing possible White House plans outlining the use of military force in Iran.

Unplanned US refinery outages and the ongoing shut-ins in Nigeria were also providing bullish impetus.

On the regional front, strong refining margins with the differential between 97 RON and naphtha hovering around US$16.00/bbl and cheap freight rates saw bullish sentiment on Asia-Pacific grades moving from strength to strength.