Sudan, South Sudan Reach Deal to Resume Oil Exports
South Sudan will be able to resume oil production before the end of the month, the African nation’s oil minister said on Tuesday after negotiations with Arab Sudan concluded successfully.
Former South African president Thabo Mbeki, who led four days of talks between the two Sudans in Addis Ababa, the capital of Ethiopia, also said that the countries had agreed to restart exports and withdraw their troops from the area surrounding their disputed border.
The leaders of Sudan and South Sudan agreed in January to demilitarize the border region.
Landlocked South Sudan, which seceded from Sudan in July 2011, had suspended its daily petroleum output of some 350,000 barrels a year before amid a price dispute with the north which needs the entirety of its oil production, estimated at 115,000 barrels per day, to meet domestic demand. Khartoum confiscated South Sudanese oil exports in 2012 to make up for what it said where unpaid transit fees.
As recently as last April, hostilities broke out when Sudanese air forces reportedly bombed oilfields near the border and the South raided a town there.
Tuesday’s deal did not finalize ownership of the border areas. Rather a team of African Union experts will make recommendations to the governments in Juba and Khartoum about how to resolve the dispute. Interior ministers from both countries plan to meet next week to discuss the opening of border crossings and ease the movements of citizens between them.
The leaders of Sudan and South Sudan agreed on Saturday to demilitarize the disputed border area between them.
According to an African Union mediator, Presidents Omar al-Bashir, the military dictator of the largely Arab and Muslim north, and Salva Kiir Mayardit of the partly Christian South agreed after two days of talks in Ethipia “that actions should be taken as soon as possible to implement all the existing agreements unconditionally.”
The institution of a buffer zone was part of the agreement under which the South seceded from the African country. As of Saturday, they had yet to comply with the deal.
A 2005 peace deal failed to permanently resolve the border issue. Most of the former unified Sudan’s oil reserves are situated in the area. Landlocked South Sudan accounts for two-thirds of the country’s oil production but needs access to northern pipelines and port facilities to sell overseas. Its main customer is China which, despite pleas from Juba, has refused to intervene in the dispute.
South Sudan pumps around 350,000 barrels of petroleum per day, according to government data. The north needs the entirety of its oil production, some 115,000 barrels per day, to meet domestic demand. Before the South declared independence in 2010, Sudan sold more than 60 percent of its oil to China.
The north confiscated South Sudanese oil exports in January of last year to make up for what it said where unpaid transit fees. As recently as last April, hostilities broke out when Sudanese air forces reportedly bombed oilfields and the South attacked a border town.
In August, the government in Khartoum agreed to continue Southern oil transfers at a fee of nearly $9.5 per barrel. South Sudan agreed to pay more than $3 billion in addition to fees to get the oil flowing again. $3 billion more is supposed to be paid by outsiders to satisfy the north.
North, South Sudan Agree Terms of Oil Transfer Deal
The Sudanese government agreed to transfer Southern Sudanese oil again at a fee of nearly $9.5 per barrel, the Financial Times reports. The South is heavily dependent on petroleum exports which were blocked in recent months by the government in Khartoum over a price dispute.
Landlocked South Sudan has two-thirds of the former unified Sudan’s oil output but needs access to northern pipelines and port facilities to sell overseas.
Despite a 2005 peace deal, possession of oil reserves which are situated near the border remains a source of contention. Khartoum confiscated South Sudanese oil exports in January of this year to make up for what it said where unpaid transit fees. As recently as last April, hostilities broke out with north Sudanese air forces reportedly bombing oilfields and the South attacking a border town.
The Southern government in Juba will pay more than $3 billion in addition to fees to get the oil flowing again. $3 billion more will have to be paid by outsiders to satisfy the government in Khartoum. The United States won’t make up for the shortfall because of economic sanctions that have been imposed on Sudan. China, a major Sudanese oil importer, may have to step in its place but has been reluctant to intervene in the conflict.
China has pledged $8 billion in loans to South Sudan to enable the country to build a pipeline through east Africa so it could rely less on the export infrastructure in the north but the country says it has received only a fraction of the money yet.
South Sudan’s minister in charge of reconciliation urged China in May to play “a more active role” to help resolve disputes over borders and oil exports. “By trying to move away from Khartoum so as to get closer to South Sudan and trying not to get too close to South Sudan so as not to cause displeasure to Khartoum — neither Khartoum nor Juba will be happy with China,” said Pagan Amum Okech.
China doesn’t want to pick sides, fearing a backlash against what is sometimes already perceived as economic exploitation or neocolonialism in the African states where Chinese companies do business.
Moreover, Beijing insists on a foreign policy of noninterference as it has to maintain amicable ties with both governments if it is to continue to buy Sudanese oil.
South Sudan pumps around 350,000 barrels of petroleum per day, according to government data. The north needs the entirety of its oil production, some 115,000 barrels per day, to meet domestic demand. Before the South declared independence last year, Sudan sold more than 60 percent of its oil to China.
While the attention of Arab and Western media was largely focused on the historic victory of the Muslim Brotherhood’s presidential candidate in Egypt, street protests of a scale not witnessed for two decades continued into their second week in Khartoum and other major Sudanese cities. There are also protests in Gabon and Togo while the upcoming elections in Kenya are anticipated with anxiety.
Africa tends to be viewed through a prism of disease, starvation, violence and, most of all, corruption. When the “Arab Spring” erupted in late 2010, it was generally seen as a Middle Eastern phenomenon rather than an African one, even if its main protagonists were all located on African soil. However, while events to the northeast of Tunisia have dominated the news coverage, events to the south have been no less tumultuous.
At the same time, a perceived “African spring” is probably more a Western anticipation and less an African reality. This is what the cases of Kenya and Sudan show to us.
If there was an African spring, it happened more than twenty years ago. On July 7, 1990, Kenyans rose up against an oppressive regime and defied orders, gathering at Kamukunji grounds to press for democracy. The government responded with a brutal crackdown in which several people were killed. Many more such protests followed and many more lives were lost over the years before an era of multiparty rule was finally ushered in at the end of 1992.
In Sudan today, there is certainly discontent with the regime but it is far from clear whether it could produce a popular uprising. Indeed, President Omar al-Bashir stated, while protesters in Khartoum were demanding regime change, that “there is no African spring.” He may be right.
Though neighbors, Kenya and Sudan are very different countries. To regard political developments in both as part of a comprehensive “African spring” would be wistful thinking at best.
Consider that while in Egypt and Tunisia, even Gabon and Kenya, it is the close relationship between the ruling elites and the agents of globalization that is the source of public outrage; in Sudan and Zimbabwe, it’s vice versa. Presidents Bashir and Robert Mugabe of Zimbabwe attempt to discredit demonstrators in their countries by referring to them as “agents of Western imperialism and remnants of colonialism.”
Rising up against one’s government makes less sense for most Africans than protesting through informal politics and their own perceived political societies. In Sudan, this poses little threat to the regime. The military and security establishment is loyal to the central government while the opposition and civil society are divided and weak.
Kenya is a different story. Rapid urbanization since the 1990s has brought with it a huge set of problems, from fuel and housing scarcities to unemployment which, if unresolved, will destroy the old bonds of community that exist among Kenyans.
In Nairobi, officials estimate that close to 70 percent of the urban labor force is employed in the informal sector. Petty commerce and street vending predominate. Such employment, which barely meets subsistence needs for many in it, has become ever more illicit as protectionist barriers are reduced and fewer domestic goods are produced for resale.
Much of informal employment is confined to a world of violence and impunity, not just because of the sheer illegality of the goods that are traded but also due to the involvement of contraband, drugs and guns. The organizations that operate in the field often act as miniature states by monopolizing the means of violence and providing protection in exchange for loyalty and territorial dominion.
So there are no mass uprisings in Kenya. The dispirited and unemployed youth find shelter in the perceived political society of criminal organizations like Mungiki which simultaneously act as employer, protector and social worker.
Clive Gabay, an acclaimed analyst of African politics at the Queen Mary University of London, put it best: “African elites are not uniquely corrupt, nor do they exist in a vacuum of African corruption but neither is Africa a pure victim of contemporary economic imperialism.”
African elites are as complicit in processes of resource and profit extraction as the multinational corporations such as Shell Oil who so often come in for the vitriol of social justice and anti-corporate activists. What Africans have been railing against over the past few years then is what Thandike Mkandawire called at the turn of the century Africa’s ‘choiceless democracies.’ In other words, Africans want a true choice. It is not enough for international donors to call for ‘free and fair’ elections, only for them to enforce, by dint of the implicit threat of aid withdrawal, a complicity among all the candidates with neoliberal economic orthodoxy.
Want the Western world should anticipate indeed, is not an African Spring but a “cheetah uprising” — the rise of a healthy civil society.
Sudan Mobilizes Army as South Claims Key Oil Fields
Conflict between Sudan and South Sudan reemerged last week after northern air forces struck targets south of the border.
Tensions most recently erupted when a village in South Sudan was bombarded by the Sudanese military. In an act of retaliation, the South Sudan Army attacked the town of Heglig in an effort to control the oil wells in the area surrounding it.
There is the possibility that the African Union and United Nations will get involved to try to mediate between the two countries.
The complexity of the conflict between them is not only who controls the oil but also the role of rebels in the region and lack of definite borders between north and South Sudan.
The conflict between Sudan and South Sudan is multilayered as it involves local politics, the oil industry and the need for regional cooperation and stability.
The newly independent South Sudan, which formally seceded in July 2011, has yet to clarify issues with Khartoum including the solving of national debt and the delineation of the border.
Geopolitically, the conflict was intensified with the occupation of Heglig by the South Sudan Army. The area around it is rich in oil. Landlocked South Sudan relies heavily on the export of petroleum for its economy. However, the transportation of that oil goes through Sudan’s infrastructure. Because the two states could not reach an agreement on the expense of using the infrastructure, South Sudan has shut its 350,000 barrel per day output.
To further add to the conflict, accusations of rebel support have been flung between both countries.
The United Nations’ ambassador to Sudan stated that if the Security Council doesn’t condemn South Sudan’s actions, there will be retaliation by Sudan which could lead to regional conflict. The African Union has urged South Sudan Army to leave Heglig. Both organizations are calling for constraint on both sides.
Wikistrat Bottom Lines
There have been opportunities for the African Union and United Nations to get involved and assist in negotiations between the two Sudans. Perhaps the most successful way of achieving such talks is to put forth actors from both countries, such as senior officials or prominent leaders in the community. That way, they can guide the mediation while giving space to the two countries to solve their own problems.
The production of oil will be affected as the South Sudanese army has taken control of one of the most productive fields in the country. This could lead to a disruption in fuel supplies in the region and could affect the oil industry in the global market. There is also the risk that investors or regional neighbors get involved in the dispute in exchange for oil.
Due to the various problems and issues between them, negotiations between Sudan and South Sudan cannot commence overnight. In order for talks to be set, the environment needs to be more stable. Both parties need to be willing to discuss and compromise on the issues that divide them. This stage has yet to be reached.
Monica Gameiro and Graham O’Brien contributed to this analysis.
Sudan Confiscates Southern Oil, What Will China Do?
Sudan’s government announced this weekend that it had confiscated petroleum exports from newly independent South Sudan as compensation for unpaid transit fees but it promised that it would not shut down a pipeline carrying the south’s oil.
The move is likely to exacerbate tension between the two Sudans and could force China, which is major Sudanese oil buyer, to adjust its policy of noninterference if it isn’t to lose access to the region’s oil reserves.
South Sudan declared independence last year after decades of conflict with the north. Despite a 2005 peace deal, many disputes remain unresolved. Among them, possession of oil reserves which are situated close to the border.
Landlocked South Sudan has two-thirds of the former unified Sudan’s oil output but needs access to northern export infrastructure to sell overseas. South Sudan pumps around 350,000 barrels per day, according to government data. The north needs the entirety of its oil production, some 115,000 barrels per day, to meet domestic demand. The two parties haven’t agreed on transit fees yet but resumed talks sponsored by the African Union on Tuesday.
In the meantime, Khartoum has confiscated southern oil as a form of payment for use of its pipeline and port facilities on the Red Sea.
Before the south seceded last year, Sudan sold more than 60 percent of its oil to China. 90 percent of it came from the south so the Chinese have to maintain stable relations with both governments if they are to continue buying Sudanese oil. The likelihood of renewed conflict over oil exports puts Chinese energy security at risk and could increase its dependence on another country that Western oil majors rather avoid — Iran.
Some 15 percent of Iranian oil exports is destined for China but the country’s petroleum industry is under pressure from international sanctions. European countries, which combined account for a similar share of Iranian exports, are expected to declare an embargo this month while Japan announced last week that it would support a boycott.
So China’s foreign policy of noninterference is challenged in two instances. Where it has thus far refused to meddle in the internal affairs of nations it does business with, especially in Africa, sudden disruptions in Sudan’s oil supply may tempt it to change that position.
With regard to Iran, China is under American pressure to reduce its oil buys. It may not have much sympathy for the Iranian regime but has to buy wherever it can. China imports more than a third of its oil and its oil consumption grows by 7.5 percent per year. It is estimated that China’s oil reserves amount to some eighteen billion barrels which makes them the fifteenth largest reserves in the world, behind countries like Kazakhstan, Libya, Mexico and Nigeria.
With Western companies dominating the market in most of Africa and Arab oil exploited exclusively by government monopolies, China has little choice but to turn to unstable countries like Sudan if is to continue to fuel its economic growth.
The Washington Post reports that the Obama Administration has gathered evidence of Chinese companies helping Iran develop its nuclear program and missile technology. One American official associated with the investigation said the companies may be acting without knowledge of the Chinese government.
United Nations sanctions restrict international companies from investing in Iran’s nuclear and weapons programs. If the allegations are true, Chinese businesses are in violation of these sanctions but it is unclear how they might be punished.
American officials provided a “significant list” of Chinese companies and banks still doing business in Iran during a visit to Beijing last month. Washington faces a serious challenge in persuading China to wind down investments in the Iranian energy sector. Along with India, it would seem that China is trying to work around the sanctions to continue to do business in Iran.
To make matters worse, a special United Nations investigative panel presented a report on Darfur to the Security Council that shines light on a potentially illegal weapons trade between Beijing and Khartoum. The current round of sanctions prohibits the Sudanese government from importing weapons for its military campaign in the Darfur region. Recently, however, investigators discovered Chinese bullet casings at the sites of numerous attacks against international peacekeepers.
Beijing vehemently denied allegations that its weapons are being used in Darfur and has insisted that the report be rewritten.
Under the current sanctions regime, Sudan is permitted to import weapons as long as they are not employed in the Darfur campaign. As expected, the government in Khartoum has repeatedly skirted the rules.
Investigators told the Security Council that Sudanese forces have used more than a dozen type of Chinese ammunition against rebels in Darfur. Unidentified assailants also used Chinese bullets during several recent attacks on peacekeepers. These munitions have fueled a bloody conflict in which over 300,000 people have been killed and almost three million driven from their homes.