- Joint venture builds on reserve of riches -
Developing partnership with China comes to fruition in a new refinery which boosts capacity for export significantly
The inauguration of the Khartoum Refinery Company's new plant last year marked a significant step forward in the growing economic relationship between China and Sudan. A sign of the importance placed by the Sudanese government on the link with China was when President Al-Bashir presided over the official opening ceremony last June.
The refinery is a 50/50 joint-venture between the Sudanese government and China International (Sudan) Refinery Company; an offshoot of the giant China National Petroleum Corporation (CNPC), which is also heavily involved in Sudanese oil production. Built with a design capacity that enables it to process 2.5 million tonnes of crude oil a year, the refinery produces unleaded petrol, low-sulphur diesel, fuel oil, kerosene and liquefied petroleum gas. Annual output is a little over 2.25 million tonnes of oil products.
Asked why the CNPC chose to enter the joint-venture partnership, Khartoum Refinery Company's general manager, Yang Zhen, outlines a list of attractions. "Firstly, economic development is stable in Sudan. Secondly, the future prospects for the Sudanese petroleum sector are good. Thirdly, the Sudanese government guarantees payment." Mr Yang adds that during the negotiations on the terms of the joint-venture agreement, which was signed in March 1997 to set up the company, "the Sudanese government displayed a very flexible policy, with good features such as fixed investment schedules. "The government was very good with the tax system, meaning that materials purchased for the construction of the refinery were exempted from tax. It is a good deal," says Mr Yang.
Although the refinery was designed and built by Chinese companies, the contractors took pains to consult the Sudanese authorities regularly, and Chinese technicians formed a cooperative relationship with Sudanese officials. Throughout the project, from the initial engineering to final completion, Mr Yang says, "we discussed the details so that every problem was solved smoothly". Mr Yang emphasises the contribution that the refinery is making to Sudan's economy.
The country has started exporting oil at a time of high world prices, when it would otherwise have had to spend large amounts of capital on importing petroleum products. The refinery has instead helped to make Sudan self-sufficient in the supply of many oil products. More important still, most of the output is surplus to requirements and is exported, earning valuable hard currency income.
Mr Yang foresees possibilities for expansion in the future and believes both he and his colleagues will play a part in this, having set the pace in forging a close partnership with the Sudanese. "Now, with oil, Sudan's economy will develop quickly, and both countries should benefit from this cooperation," he says. "We are confident that this partnership will be an example for others to follow. We think there is new thinking in Sudan and we are happy to help."