Vehicles queue at a petrol station in the south of Sudan's capital Khartoum. AFP
Vehicles queue at a petrol station in the south of Sudan's capital Khartoum. AFP
Vehicles queue at a petrol station in the south of Sudan's capital Khartoum. AFP
Vehicles queue at a petrol station in the south of Sudan's capital Khartoum. AFP

MENA

Sudan has just 10 days of oil supplies as protesters shut pipelines

Oil tankers have been blocked from loading and unloading at Red Sea port in peace deal protests

The National

September 25, 2021

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Sudanese protesters on Saturday blocked two key oil pipelines in Port Sudan, the main port on the Red Sea, over a peace deal with rebel groups, the oil minister said.

Oil Minister Gadein Ali Obeid warned that this was "an extremely grave situation".

He told AFP that one pipeline transports oil exports from South Sudan while the other handles Sudanese crude imports.

There are enough [oil] reserves to last the country's needs for up to 10 days
Sudan Ministry of Oil

"Entrances and exits at the port's export terminal have been completely shuttered" since early Saturday, he said.

Last October, several rebel groups signed a peace deal with Sudan's transitional government which came to power shortly after the 2019 removal of long-time autocrat Omar Al Bashir.

The protesters, from Sudan's Beja minority, say that the deal, with rebels from the Darfur region and Blue Nile and South Kordofan states, ignored their interests.

Beja rebels agreed a peace deal with the Bashir regime in 2006, after a decade of low-level conflict in Port Sudan and the east.

Port Sudan is the country's main seaport and a vital trade hub for the export-dependent economy.

The Khartoum government receives around $25 for every barrel of oil sold from neighbouring South Sudan, according to official figures.

South Sudan produces around 162,000 barrels per day, which is transported by pipeline to Port Sudan and then shipped to global markets.

"There are enough [oil] reserves to last the country's needs for up to 10 days," Sudan's Oil Ministry said.

It warned the export pipeline could be damaged, after demonstrators prevented a vessel from loading crude.

Protests against the October 2020 peace deal have rocked east Sudan since last week.

On September 17, demonstrators impeded access to the docks in Port Sudan.

On Friday, demonstrators blocked the entrance to the Kassala Airport and a bridge linking Kassala state with the rest of the country.

The unrest comes as Sudan grapples with chronic economic problems inherited from the Bashir regime.

On Tuesday, the transitional government of Prime Minister Abdalla Hamdok said it had foiled a coup attempt by supporters of the ousted president.

More from Firas Maksad

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: September 25, 2021, 4:23 PM