1.    North Sudan

The introduction of the new unit "Cracker Unit" at Khartoum Refinery (Gaili) has enabled the SPC to increase its capability from 50.000 to 100.000 barrels per day.  This means that Diesel production is increased around 20% and Jet A1 around 50%. The effect to date of the surpluses has resulted in the 6" pipeline connecting the refinery to Port Sudan being reversed and Mogas, Jet A1 and Diesel exported.

The product fuels Mogas, Jet A1 and Diesel are being stored in the importation terminal at Port Sudan.  The storage tanks are filling up rapidly and the knock on effect will be that importation will not be possible.  The reasoning behind this move by the SPC is based on sound business economics.  Currently Gaili is fed by "Sour Crude" that sell at around US$ 30 to US$ 40 per barrel, which is at the lower end of the market due to the high sulphur content.  However, when refined into say Jet A1 it sells at US$ 120 per barrel.  It is known in the industry as "added value".

The Humanitarian Community, served by the private sector, will actually benefit.  The UNMIS contract may take some time to adjust to the new circumstances.

A price guide that illustrates the mechanism is shown below:

The above rates to give the illustration were taken on 1st December 2006.  However Platts alters up and down every two weeks and the SPC alters between six to nine months and therefore the SPC costs are more stable.

"These are significant cost saving available by using local produced fuels."

2.    South Sudan

Kenya is principally the gateway to supply of goods to the landlocked countries in the region which include Uganda, Rwanda, Burundi, Eastern DRC and South Sudan.  There imports include petroleum products handled and transported through Kenya.

Due to the economic recoveries witnessed in these countries, their combined demand for petroleum products and lubricants has risen significantly. As a consequence, this has strained the pumping capacity of the Mombasa-Nairobi oil pipeline.  To address this challenge in the short term the Kenya Government, through its parastatals, the Kenya Pipeline Company and the Kenya Railways Corporation, has implemented the following measures:

• Enhance the pumping capacity of the Mombasa-Nairobi pipeline segment from 400.000 litres per hour in January to 450.000 litres per hour in March 2006.
• Allowed discharge of imported petroleum products through the Shimanzi Oil Jetty in addition to the Kipevu Oil Jetty.
• Provision of 140 railway tank wagons for the transportation of imported petroleum products destined for export to the land lock clients.
• "Loading of export and transit petroleum products from Mombasa, Nairobi and Nakuru by road tankers in addition to the normal terminals at Eldorit and Kisumu.

As a longer term solution, contracts have been let to install four booster pump stations to increase the flow rates in the Mombassa-Nairobi pipeline to 880.000 litres per hour.  This should be completed by mid 2007 which will be more than adequate to sustain demand in both Kenya and the landlocked countries for the next ten years.

In addition to the above a study is taking place to extend the pipeline to Uganda, Eastern DRC and Rwanda.

The operational storage of Jet A1 in Kenya stands at more than 80 million litres, which is more than adequate to handle the demand forecast for the next eight years.

The current figures for this year of imports into South Sudan are 700.000 litres of Jet A1 and 1.2 million litres of Diesel.
 
Transportation of fuel products in the South has been effected by the weather this year, which has suffered what can be best described as an "El Nino" effect with heavy unseasonal rains.  However, the road improvement programme has allowed road deliveries of fuels and although we noted some close calls throughout the period and costly air deliveries to the Humanitarian Community shelved.  We also note that both, the Wau-Abyei and the Bor-Malakal road, are funded and progressing.  These will make a significant difference.