China beating U.S. to South Sudan oil market
3 min readBy Aamer Madhani, USA TODAY
No country was as intimately involved as the United States in making certain that South Sudan’s secession went off smoothly earlier this summer, and the birth of the new nation is expected to be a point of celebration at this week’s meeting of the United Nations General Assembly.
But when President Obama and South Sudan President Salva Kiir sit down for the first time on the sidelines at the U.N. on Wednesday, they’re also expected to discuss South Sudan’s oil market and U.S. companies conspicuous absence from the marketplace.
Since South Sudan declared independence in July, it’s China — an ally of Sudan President Omar al-Bashir — that’s been the most active in forging a way into South Sudan’s flush oil market. China has already dispatched its foreign minister to the capital of Juba, and is preparing to welcome Kiir for a visit at the end of the year.
But Sudan remains under U.S. sanctions, complicating American companies getting into the South Sudan market. Princeton Lyman, President Obama’s special envoy to Sudan, said since the two countries’ oil industries are so interconnected — sharing a pipeline and other infrastructure — it has been impossible for U.S. oil companies to enter the market now dominated by Chinese, Indian and Malaysian companies.
“I’m sure we’re going to open that door, but the rules of the game are still being worked out and that is very frustrating to the South because they want American oil companies there,” Lyman told reporters.
The long running north-south civil war, which claimed about 2 million lives before officially ending in 2005 with the signing of a peace agreement, effectively left Bashir and his government in Khartoum isolated on the world stage. Oil-hungry China, however, continued to do business with the Bashir regime as the rest of the world shunned Sudan.
But Lyman said that China saw the handwriting on the wall and began laying the groundwork to build a relationship with Juba while maintaining its relationship with Khartoum.
“The South’s attitude is: “Fine, What are you offering? What are you going to do for us,’ ” Lyman said. “They see those companies as helpful in keeping the north from retaliating against the (two-countries shared) pipeline or something like that. I don’t get the sense they’re against working with countries that are working with the north.”
Ultimately, Congress — which remains deeply suspicious of Bashir — would have to approve any relaxation of sanctions.
In the meantime, the Treasury Department has begun to review areas where it may be possible to engage South Sudan’s oil industry without violating sanctions. Lyman said the U.S. government will also host a conference in Washington this fall to promote private investment in South Sudan.
“They’re hungry for American investment,” Lyman said.
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