[Dehai-WN] (IPS): SOUTH SUDAN: Oil Conflict Threatens to Break Out

[Dehai-WN] (IPS): SOUTH SUDAN: Oil Conflict Threatens to Break Out

From: Berhane Habtemariam <Berhane.Habtemariam_at_gmx.de_at_dehai.org>
Date: Wed, 12 Oct 2011 00:08:26 +0200

SOUTH SUDAN: Oil Conflict Threatens to Break Out


By Charlton Doki*

JUBA, Oct 11 (IPS) – The communities living on the South Sudan-Sudan border may face genocide if the conflict between the two countries disputing control of oil reserves is not resolved.

There have been recent clashes between the Sudanese army, Sudan Armed Forces (SAF) and the Sudan People’s Liberation Army-North (SPLA-N) in Sudan’s Southern Kordofan and Blue Nile states, as well as fighting between communities along the border. Southern Kordofan lies south of Sudan’s capital, Khartoum and borders the war-ravaged region of Darfur to the west. Blue Nile state lies south east of Khartoum and borders Ethiopia to the east.

This comes as the communities in these oil states become progressively militarised with arms increasingly available to civilians, according to a report by a local non-governmental organisation.

"One day the communities on the border may end up either facing genocide or there may be a very heavy war as the governments in both countries do not value the lives of the people but the resources they are sitting on. These resources will undermine the value of the lives of human beings," Edmund Yakani, the coordinator for the local NGO Community Empowerment for Progress Organization (CEPO), told IPS.

"The governments in the two countries look at the border from the perspective of economic gains rather than from the perspective of the communities living here," he added.

Yakani said the borders are important as the economic strength of the two countries is defined here. "If you talk about petroleum it is found here, at the border. That is why the (National Congress Party) NCP-led government in Khartoum is now saying that areas like Heglig, near Unity state, and Kaka, in Upper Nile state (where there is a high production of petroleum) are disputed areas," he said.

About 85 percent of the oil produced in Sudan and South Sudan combined comes from South Sudan. Much of the oil produced in South Sudan comes from the border states of Bentiu and Upper Nile. However, there is also oil in Jonglei state, which is in the interior.

A CEPO report released on Sep. 17 found that the communities on the South Sudan-Sudan border are highly militarised and experience a lot of insecurity and violence. The report found that there was a "rapid flow of arms into the hands of the civil population" on the Sudanese side in order to instigate violence with those living across the border.

"On the South Sudanese side civilians have acquired guns, supposedly for self-defence against – what they see as – Khartoum aggression and invasion," the report said.

This situation could eventually lead to a war.

"The South has displayed extraordinary restraint in the face of extreme aggression from Khartoum," Eric Reeves, a Sudan analyst and researcher at Smith College in the United States, told IPS.

"It hasn’t responded with force despite continued bombing of its own territory that began almost a year ago last November, systematic assaults by military aircraft on Southern territory as well as the military seizure of Abyei; it has thus far avoided joining forces with the fighters in the Nuba Mountains of (South Kordofan) or in the Blue Nile. But this can only last for so long," Reeves said.

If Khartoum’s assault on the Sudanese-Ethiopian border town of Kurmuk – the dominant stronghold of the SPLA-N – continues, the likelihood of a united front between disparate forces fighting Sudan’s President Omar al-Bashir’s troops increases.

"Khartoum is moving with a full armoured brigade towards Karmuk, the capital of Sudan People’s Liberation Movement-North (SPLM-N)," Reeves told IPS. "If that falls it’s going to signal a continuing guerilla warfare of the sort we are seeing in South Kordofan."

"This is no ordinary guerilla warfare," he added. "The men fighting (Khartoum) may not have as much equipment as the SAF, but they are highly motivated and too well trained to be easily defeated."

"A senior official of the SPLM-N, told me that many Northern soldiers have no stomach for this fight. This has caused Khartoum's generals to rely more on the use of artillery, tankfire and military aircraft – which is a great way to kill civilians but not a strategic way to dislodge a military (guerilla) force. So we are definitely looking at a protracted conflict," Reeves told IPS.

"If South Sudan and the Nuba fighters link up with the SPLA-N military forces in Blue Nile and the rebels in Darfur, we will see a war stretching from the Chadian border to the Ethiopian border and potentially up the Eritrean border as well," Reeves told IPS.

The CEPO report recommended an immediate demarcation of the border to "minimise settlement along the border line, save the lives of the communities, minimise displacement and violence along the border line."

The conflict has also affected oil production as oil contractors move away from areas of violence. Currently 98 percent of South Sudan’s revenue comes from oil.

Undersecretary at South Sudan’s South Petroleum and Mining Ministry David Loro Gutbek told IPS that oil production in both Sudan and South Sudan has decreased in the border areas. "As of now our production in South Sudan has gone down from 85,000 barrels per day (bpd) to 60,000 bpd."

The reduced production is in three oil well blocks in Unity state where most of the country’s oil is found. Production in Melut in Upper Nile, which is not affected by violence, continues as normal. "On the Sudanese side of this area of the border, oil production has reduced from 60,000 bpd to only 48,000 barrels," Gutbek added.

Gutbek said that if production was normal, South Sudan would produce 300,000 bpd. He said amidst the violence it was not possible to provide security around the oil production areas and as a result "unknown people" were sabotaging the oil industry.

"They cut cables in the fields and these then need to be fixed, which slows down the work and lowers the quantities of oil produced per day," he said.

Gutbek told IPS that if the violence continued the oil production would continue to decrease. However, he was hopeful that a solution would be found and the border area would be secured.

"Some measures will be taken by the two governments in Juba and Khartoum to ensure that nothing interferes with the quantities of oil produced along the border. A security committee comprising officials from both Sudan and South Sudan has agreed to monitor the situation and improve security along the border area," he said.

Environmental economist and World Bank consultant on Private Sector Development in South Sudan, Spencer Kenyi told IPS that he believed the violence along the oil rich border would – as he put it – push South Sudan to develop its own oil infrastructure to avoid relying on Sudan. It had been a long-term plan of South Sudan, but the country may have to do this sooner than expected.

"Although violence is not a welcome thing, it is going to create some positive move in South Sudan where the government will think about setting up its own oil, facilities like pipelines and refineries," he said.

South Sudan plans to build three refineries and has discussed as a 3,600 km pipeline from South Sudan to then Kenyan port of Lamu.

South Sudan currently pays what it calls exorbitant fees for the use of Sudan’s pipelines and support services. The bulk of the infrastructure that supports the oil industry is in Sudan. Sudan has three refineries located in Khartoum, Port Sudan, and El-Obeid. The Khartoum refinery was expanded in 2006 from a capacity of 50,000 barrels per day to 100,000 bpd. The Port Sudan facility is located near the Red Sea and has a refining capacity of 21,700 bpd.

"It will lead the government of South Sudan to refocus its strategy in the oil industry. They will speed up the idea of setting up transport systems for oil export from South Sudan in order to circumvent the violence that’s going on in the border areas," Kenyi said.

He added that if the violence continued South Sudan may have to completely shut down the oil sector, though temporarily. "The government may close the oil sector completely for a certain period and focus on areas like livestock farming and agriculture as the biggest income earner for the economy," he said.

He explained that this would in turn "break the back of the violent conflict arising out of the oil wealth along the border" and any subsequent efforts to demarcate the border will be much more amicable and peaceful.

*Kanya D’Almeida in Washington contributed to this report.



SUDAN: China Could Oil the Peace Process

By Reem Abbas*

KHARTOUM, Oct 11 (IPS) – China, a major player in the oil industries of South Sudan and Sudan, could use its influence to stop the escalating violence between the two countries that has seen the displacement of thousands of people and a reduction in oil production, a United States State Department official says.

China imports more than 60 percent of Sudan’s oil and owns a 40 percent share in Petrodar and the Greater Nile Petroleum Operating Co., the largest oil giants in Sudan, according to the Chinese Academy of Social Science.

But ongoing conflict in Sudan and South Sudan has impacted oil production with the South Sudanese Petroleum and Mining Ministry saying that production in South Sudan has reduced from 85,000 barrels per day (bpd) to 60,000 bpd on the border states. The ministry also noted that Sudan’s production of oil in the border states reduced from 60,000 bpd to 48,000.

Southern Kordofan, a state in Sudan that borders South Sudan, has witnessed ongoing fighting since June and Blue Nile state, a state in Sudan close to the Ethiopian border, became embroiled in conflict in early September. Both conflicts are between the Sudan People’s Liberation Movement-North (SPLM-N), a group affiliated with the Sudan People’s Liberation Movement, the ruling party in South Sudan, and the Sudanese army.

Southern Kordofan, explained Sudanese political commentator Magdi El Gizouli, became the largest oil producer in Sudan after South Sudan’s independence.

In the early stages of the now full-fledged conflict in South Kordofan United States State Department spokeswoman Victoria Nuland pointed out, "It’s hard to have money and oil when there’s no peace," adding that Beijing should "take this opportunity to (stop) the violence in Sudan."

"The U.S. doesn’t have much of a (diplomatic) muscle to flex any more," David Shinn, former United States ambassador to Ethiopia, told IPS back in June.

"The only thing it can do other than pontificate more vociferously than it has in the past is to threaten to slow down any aspects of the normalisation of relations."

However, this method of dangling the carrot of possible debt relief and political pardons before the dictator has not had much of an impact on Sudanese President Omar al-Bashir, the only sitting head of state to have been indicted by the International Criminal Court (ICC).

Even though most of the oil is concentrated in the newly independent South Sudan, the pipelines, support services and the bulk of the infrastructure that supports the oil industry are in Sudan.

Since last year, the two nations have been in talks about the fees Sudan charges for use of its infrastructure. "South Sudan's main income is derived from its oil revenues, the South will protect the oil industry despite the ongoing conflict because they can’t afford to lose oil production, even if it is temporary," said Mohammed Adel (not his real name), an employee in Petrodar’s pipeline department. About 98 percent of South Sudan’s revenue is from oil.

When Petrodar began oil production after its 1,506 km pipeline was completed in 2006, oil production rose from 300,000 bpd to 500,000. Only 100,000 to 110,000 bpd of Sudan's daily output was produced in North Sudan, the rest came from the oilfield in what is now South Sudan. The Petrodar pipeline runs from Melut Basin in Upper Nile state, South Sudan to Port Sudan. Upper Nile state is located between two conflict areas, Southern Kordofan and Blue Nile state.

"Recently when the Sudanese government asked for 32 dollars per barrel as the price of export, the South Sudanese government rejected the high prices," said Adel.

Last month, the Sudanese government withheld 600,000 barrels of oil for 24 hours demanding custom duties. However, the barrels were eventually released and it is unknown if South Sudan paid the duties or not.

In an interview with the London-based Saudi Arabian newspaper, Asharq Al Awsat, al-Bashir stated that the government of South Sudan needed to decide on transit fees before the end of October.

However, the South Sudanese government wants the negotiations on oil to take place at an African Union meeting chaired by Thabo Mbeki, the former president of South Africa.

"Many people believe that plunging oil revenues will deter the North from forging ahead with war. But I think the real question is whether Khartoum can maintain its political stranglehold over a population frustrated by severe inflation and skyrocketing food prices without a war," Eric Reeves, a Sudan analyst and researcher at Smith College in the United States, told IPS.

Given this reality, the only actor with real diplomatic leverage over Sudan is China, whose hunger for endless oil profits – which will now depend on maintaining warm relations with al-Bashir’s foes in oil- rich South Sudan – can hopefully trump its avuncular attitude towards the North that has persisted through decades of atrocities committed by the ruling National Congress Party.

Given that China is the world’s biggest oil importer after the U.S., relying on Sudan and Libya for the bulk of its supply, the rising superpower is unlikely to sacrifice its petro-lubricated economic boom for the sake of honoring old ties with al-Bashir – especially when the latter is risking all-out war around the precious oilfields in the South.

A 2008 Wiki-leaked State Department cable from ICC prosecutor Luis Moreno Ocampo stated, "China does not care what happens to Bashir and would not oppose his arrest if (oil) revenues were not interrupted."

Hafiz Mohammed, a Sudanese political analyst agreed with this saying that the Chinese petroleum companies were only interested in oil.

"Most of the Sudanese oil is explored by Chinese petroleum companies who do not care much about human rights, they care about investment and trade," said Mohammed.

"To some extent, oil fuels conflict by financing conflict, instead of bringing prosperity, growth and elevating society, it also polarises the political sphere since opposing opinions are bought with oil money," he told IPS.

China has invested in Sudan while western companies are wary of investing in the country because of its human rights records and the U.S. sanctions imposed on Sudan since the 1990s for allegedly supporting terrorism and the ongoing conflict between the government and rebel groups.

"In the boom years, the Sudanese oil industry was a high risk, high profit sector. Western corporations were as involved as the Chinese, however, the latter are under no pressure from domestic lobbies to quit the business," said El Gizouli.

In 2003, Canadian energy group Talisman, sold its 25 percent stake in the Greater Nile Oil Company after it received heavy criticism from human rights companies at home.

China has also faced criticism by international rights groups, namely in 2008 when the Olympics were nicknamed the "Genocide Olympics" because Chinese oil corporations continued to work in without attempting to use their influence to pressure the Sudanese government to resolve the conflict in Darfur.

The European Coalition on Oil in Sudan (ECOS) reports that since 1996, oil exploration and production has caused mass displacement for the indigenous populations in oil-rich areas, most notably, Unity state, where the Greater Nile oil pipeline begins.

ECOS reported that over 15,000 were known to be forcibly displaced in Melut and Maban counties in Unity state and many were arrested by the army for complaining to oil corporations about their land rights.

*Kanya D’Almeida in Washington contributed to this report.  




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