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.

Sudans Agree to Demilitarize Disputed Border Area

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. Read more “Sudans Agree to Demilitarize Disputed Border Area”

North, South Sudan Agree Terms of Oil Transfer Deal

President Salva Kiir Mayardit of South Sudan, January 8, 2011
President Salva Kiir Mayardit of South Sudan, January 8, 2011 (Al Jazeera English)

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.

Why There Won’t Be an African Spring

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. Read more “Why There Won’t Be an African Spring”

Sudan Mobilizes Army as South Claims Key Oilfields

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. Read more “Sudan Mobilizes Army as South Claims Key Oilfields”

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.

Chinese Companies Defy United Nations Sanctions

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.