U.K.'s Blair Says Sudan Failing to Make Progress on Peace Plan

Nov. 8 (Bloomberg) -- U.K. Prime Minister Tony Blair said Sudan is failing to make progress bringing peace to the Darfur region, raising the chances of United Nations sanctions against the oil-rich nation.

"It is a very difficult and very delicate situation,'' Blair told Parliament in London. ``If anything, it has gotten worse in the last few weeks. If we do not get obedience and compliance in the next few weeks we will have to return to the UN Security Council.''

Sanctions would threaten Sudan's ability to sell oil on the international markets, which accounts for 75 percent of the nation's export earnings. Sudan started exports in 1999 and plans to boost production to 500,000 barrels a day by the end of next year from 345,000 barrels a day in June.

Last month, Blair traveled to the Sudanese capital of Khartoum for talks with Bashir, winning a commitment from the government to allow African Union troops into Darfur and to increase protection for Western aid workers in the region.

Peace Talks

African Union officials have yet to win Sudan's agreement on a security agreement outlining how and where troops could act in the region, Agence France-Presse reported today, citing delegates to peace talks in Abuja, Nigeria.

Blair said his agreement with Bashir required progress "by the end of the year.'' If that process fails, Blair said he will seek some sort of action from the UN Security Council, which could reprimand Sudan or levy economic or diplomatic sanctions.

Economic sanctions would hurt Chinese and Indian companies most, since the U.S. banned trade with Sudan in 1997. In 2002, the U.S. further tightened its sanctions, barring Americans from doing business with the Greater Nile Petroleum Operating Co., a group that taps Sudanese crude and ships it to overseas customers.

Western Companies

Except for Sweden's Lundin Petroleum AB, Western oil companies have pulled out of Sudan as violence flared between government and rebel troops in 1983. Chevron Corp. explored in the region from the 1960s to 1985.

Talisman Energy Inc. of Canada sold out in 2003, as did OMV AG of Austria. Total SA of France suspended work in Sudan but retains rights to drill, according to the U.S. Department of Energy.

China National United, or Chinaoil, and China National Chemicals, known as Sinochem, were awarded contracts in August to buy half of the Sudanese Nile Blend crude oil for sale in the fourth quarter.

Those companies, controlled by the Chinese government, also have stakes in drilling projects in Sudan and in a pipeline that exports most of the nation's crude. Oil & Natural Gas Corp. of New Delhi works in Sudan.

Sudan also needs outside help to expand petroleum refineries at Port Sudan on the Red Sea and Khartoum in the center of the nation. Those plants, with a combined capacity of 72,000 barrels a day, produce gasoline for cars and butane for cooking. The government wants each plant to produce 100,000 barrels a day.

With a population of 39 million, Sudan has an annual gross domestic product of about $15.6 billion and external debts of $21 billion. Britain allocated 62.5 million pounds ($112 million) of aid for Sudan this year.

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