Oil and war: South Sudan warns of war without ‘comprehensive’ deal
32 min read(AFP) – 02/02/12
JUBA — The president of South Sudan warned Thursday of renewed conflict with former foes in north Sudan if bitter oil negotiations do not include a deal on other key issues, including the contested Abyei region.
“It would not be fair to my people to support an agreement that invites more conflict by failing to resolve underlying issues,” Salva Kiir told reporters.
“An agreement that we would consider signing should not only focus on the oil crisis, but be comprehensive to cover all the outstanding issues,” he added.
South Sudan in January took the extreme step of shutting down oil production — the fledgling nation’s top revenue source — as it accused rival north Sudan over an oil dispute and African Union-mediated talks remain stalled.
Kiir said he had rejected an offer made last week because it failed to address the future of the contested Abyei region, an area the size of Lebanon which is claimed by both sides but occupied by Khartoum.
“The (proposed) agreement would guarantee future — and possibly immediate — conflict over land, people and oil,” Kiir said.
UN chief Ban Ki-moon said Sunday that tensions and a furious row over oil between the former enemies has become a major threat to regional peace and security.
Juba rejected a draft agreement proposing the oil-rich but grossly underdeveloped South give Khartoum $5.4 billion (4.1 billion euros), to be paid by Sudan’s taking of 35,000 barrels of oil per day.
“It is difficult for me to accept a deal that leaves our people vulnerable, dependent and paying billions that they do not owe,” Kiir said, adding that Juba wanted to ensure the fledgling nation’s economic independence.
“We reject that assumption that mutual dependency of our two nations is the path to peace. It is not. Dependency only brought us continued confrontation and human suffering. This cycle must be broken,” he said.
South Sudan split from Sudan in July, taking with it three-quarters of the country’s oil, but all pipeline and export facilities are controlled by Sudan.
Khartoum has said that Juba had not paid it for using its pipelines and refinery since South Sudan seceded in July, and admits to have confiscated 1.7 million barrels of South Sudan crude.
Tensions have also been raised by their still undemarcated border, parts of which cut through oil fields, as well as mutual allegations that each side backs proxy rebel forces against the other.
Both countries depend on oil income for a key part of their struggling economies, and oil makes up over 90 percent of South Sudan’s revenue.
Kiir said South Sudan was taking “austerity measures to ensure the continued viability of our nation” following the production shutdown.
“These measures will not be easy, however, they are necessary as we will need to close the gap created from a loss of oil revenue,” he said, urging people to accept a “temporary sacrifice for the overall good” of the country.
The two sides are due to hold fresh rounds of talks on February 10 in the Ethiopian capital Addis Ababa.
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S. Sudan raises prospect of new fighting
February 2, 2012 4:09 pm
FT
By Katrina Manson in Nairobi
South Sudan’s president has raised the prospect of renewed fighting with neighbouring Sudan after the recent collapse of talks over oil revenues, saying a proposed deal “would guarantee future and possibly immediate conflict over land, people, and oil”.
The two countries are at loggerheads over a protracted failure to strike a deal over oil pumped from the south but exported via the north. South Sudan seceded from Sudan last July after decades of civil war.
In a statement on Thursday, Salva Kiir, president of South Sudan, said of a proposed agreement over sharing oil revenues tabled by mediators from the African Union High-Level Implementation Panel in Addis Ababa last week: “It is difficult for me to accept a deal that leaves our people vulnerable, dependent and paying billions they do not owe.”
He added: “And it would not be fair to my people to support an agreement that invites more conflict by failing to resolve underlying issues.”
Between them, Sudan and South Sudan produce about 460,000 barrels a day, according to the US Department of Energy. Three-quarters of this oil is in South Sudan, but the south’s oil needs to be sent north for export. Khartoum has diverted some of South Sudan’s oil, prompting South Sudan to turn off the taps on production running to 350,000 barrels a day.
China, the largest buyer of the oil, has been forced to seek crude elsewhere. Also the largest oil investor in both countries, it has sought to speak to both parties in recent weeks to encourage a deal.
Its role has been complicated by the kidnapping of 29 Chinese workers by opposition forces close to the border in Sudan.
Mr Kiir said he rejected any plan that proposed continuing dependency, saying it previously brought only “continued confrontation and human suffering”. Mediators have been tasked to assure the two oil-dependent countries’ mutual economic viability.
The president said he refused proposed clauses that would require South Sudan to commit to use northern infrastructure and restrict the export of oil through Sudan. Analysts had previously said mutual oil dependency might be the glue that held the two countries together after the secession of the South.
South Sudan has said it wants to find alternative pipelines and refineries to take charge of its own export. It recently signed an agreement with Kenya to build a pipeline to its coast at Lamu, even though the port does not yet exist.
Mr Kiir said South Sudan was still committed to a negotiated solution through the AUHIP team, but that it must include a comprehensive resolution of the disputed border territory of Abyei and five other border areas. Talks are meant to recommence in the Ethiopian capital Addis Ababa on February 10.
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3. Oil risks fuelling flames of Sudan conflict
Thu Feb 2, 2012 5:34pm GMT
By Hereward Holland and Ulf Laessing
PALOUGE OIL FIELD, South Sudan/KHARTOUM, Feb 2 – South Sudan’s oil minister was riled when he discovered production from one of his remote oil fields was out by 40,000 barrels per day, and immediately knew who to blame.
Stephen Dheiu Dau said his old civil war foe in the north, the government of Khartoum, had stolen the crude, illustrating the depth of acrimony and mistrust over oil negotiations that some say risks tipping the two nations back into conflict.
“We believe Khartoum is pumping more reserves from this concession to allow them to operate the Khartoum refinery,” the minister told journalists on a visit to the well in the dusty Palouge Oil Field close to the restive border with Sudan.
Old suspicions festering along the poorly defined boundary between Sudan and South Sudan, which split away as an independent country in July last year, came to a head recently.
In an emotional speech, President Salva Kiir said he had no choice but to shut the oil fields to stop Sudanese President Omar Hassan al-Bashir from “stealing” oil, raising the question of how he will feed a country as big as France and pay his soldiers, who would be needed to quell any unrest.
Having failed to reach a deal on transit fees, which must be agreed as part of the 2005 deal to equitably split revenues from the oil that is mostly located in South Sudan, Khartoum started seizing South Sudan’s oil and sold one cargo.
Talks are expected to resume next week but diplomats say it’s hard to see a compromise acceptable to both sides, while meanwhile, some hear the drumbeat of war.
Fee terms are far apart, Khartoum wants $1 billion in back payments and $36 for each barrel shipped through the pipeline. Juba wants to pay less than $1 in line with world norms, saying it refuses to shoulder a share of Sudan’s external debt of $38 billion. Kiir says Sudan has “looted” $815 million from cargoes.
China, the biggest buyer of oil from South Sudan and trusted by both sides, has the best chance of brokering a deal and sent an envoy to both nations in December to help bridge differences.
The world’s newest nation is landlocked and must pump its oil through Sudan’s pipelines to the Red Sea port of Port Sudan. Industry analysts say the alternative of building a pipeline through Kenya will probably never happen.
FOOD, SECURITY AND JUBA
The discrepancy over the figures in the Palouge field — more than one tenth of total daily output — highlights the dangerously opaque nature of much of Sudan’s oil industry. Before their independence, southerners regularly complained Khartoum was not giving them a true picture of the oil reserves in their own territory.
Alongside Malaysian engineers in the control room, Dhieu Dau said:
“They confess that the metering system is not working and no justification has been given.”
Dhieu Dau told Reuters his suspicions were already aroused after he found out that the Upper Nile area had 600 wells, 200 more than previously thought, while Unity, another oil-producing state, had almost 50 more wells, showing that Sudan underplayed oil output in negotiations.
The oil industry in Sudan, with its data flows, mapping and contracts with refiners and oil field operators, was dominated by Khartoum until independence. Opportunities for wrangling over accounts and figures between Juba and Khartoum are legion.
Oil is the lifeblood for both economies but South Sudan is much more vulnerable, a war-ravaged country that must be built almost from scratch. Oil revenues make up 98 percent of state income compared to more than 50 percent in former unified Sudan.
Meanwhile Kiir’s government – mostly former rebel commanders – is trying to assemble functioning ministries in a country which has no property or banking laws.
The fertile Nile corridor splits the dry, desert north from the plains of grassland and forest in the south where about 85 percent of the people live off agriculture. The threat of famine is an unnerving fact of life and tribes have regular clashes over cattle and grazing rights.
Western diplomats fear that the new African nation, where most follow Christian beliefs, could easily slide into instability as tensions escalate with the mainly Muslim north.
The West also fears a return to radicalism, as Sudan once hosted Osama bin Laden. Most Western firms shun Sudan due to a U.S. trade embargo in place since 1997 over Khartoum’s role in hosting past militants such as bin Laden and Carlos the Jackal.
There is also unease over Sudan’s President Bashir who is wanted by the International Criminal Court accused of war crimes committed in the unresolved rebellion in the Darfur region where Janjaweed Arab nomads have been blamed for mass killings.
Apart from oil, Sudan and South Sudan have also failed to solve a long list of disputes from marking the violent border where the deadly cattle raids flare and sharing debt to finding a solution for the disputed region of Abyei.
NORTH-SOUTH STRUGGLE
South Sudanese rallied outside the assembly while Kiir was speaking to support the shutdown in oil output as a strategy to try to force Sudan’s hand. They said the row was yet another chapter in their long struggle to win freedom from the north.
“Given our history with the administration of President Bashir, we realise that unfortunately we must prepare for a disruption of revenue that could last many months,” Kiir said.
Sudan was “playing a game of looting our oil in broad daylight so we are supporting the shutdown”, Ajang Ajang Lino, head of the Student Union at Juba University, told Reuters.
“Only since the signing of the CPA (2005 Comprehensive Peace
Agreement) has South Sudan started to receive oil,” he said. “We will continue to live without oil as we had been doing 100 or so years ago.”
The government will struggle to pay salaries and cover daily expenditures longer than a few months without new oil revenues and it is not clear whether impoverished South Sudan is ready for such a sacrifice.
South Sudan’s stability rests in large part on the morale of its sprawling army, estimated by U.N. officials to comprise up to 200,000 soldiers, and which functions like a welfare system, helping villagers and maintaining infrastructure.
Should salary payments to these troops end or the patronage network of bureaucrats and high officials crumble, the army and its allies, already disaffected by old tribal rivalries, could easily slip into mutiny or rebellion, some observers say.
“Over the medium term, a sustained shutdown of oil output would have dramatic consequences for the domestic stability of the country and could lead to a collapse of central authority,” said Jean-Baptiste Gallopin, a Control Risks analyst.
Just across the border from the savannah of the Palouge oil field lie the northern states of South Kordofan and Blue Nile where the Sudanese army has been fighting insurgents of the northern wing of the Sudanese People’s Liberation Movement (SPLM), which is the ruling party in Juba.
THREAT OF FAMINE
The Khartoum government has restricted access of U.N. agencies in both states, a decision that U.S. officials say could lead to large-scale famine.
Some foreign observers say Sudan could be using famine as a weapon to flood the southern borderland with refugees to destabilise South Sudan, a theory that Khartoum denies.
“Some SPLM officials fear that Sudan hopes for instability in the borderland which could give it an excuse to seize the southern oil fields,” said a foreign observer with ties to Juba.
Almost three million South Sudanese – a third of the population – are expected by the United Nations to need food assistance this year after tribal violence and bad weather.
Anxious to reassure his people, Kiir said the government will find cash to cope with the oil shutdown but foreign experts say this will be impossible as no other industries exist.
Juba said it had contracted oil sales worth around $3 billion before the shutdown. “It’s very hard to say how much money they have. I think much of the oil revenues has been spent so they need the oil flows,” said a senior banking executive.
The shutdown by South Sudan cut off crude supplies to China National Petroleum Corp, Malaysia’s Petronas and India’s Oil & Natural Gas Corp. China and Japan scrambled to find alternative supplies after South Sudan closed down its 350,000 bpd. Its heavy sweet grades – Nile and Dar Blend – are liked in Asia.
DOLLARS DWINDLE
The oil shutdown and the drying up of revenues could have alarming consequences on South Sudan’s economy. The central bank in Juba was unlikely to have dollar reserves lasting more than three to five months, diplomats say.
South Sudan hopes to borrow funds from international markets using oil reserves as collateral, but bankers are sceptical while the oil cannot be sold. Western aid cannot replace oil.
To end dependency on Khartoum, South Sudan wants to build an alternative pipeline to the Kenyan port of Lamu, but most analysts do not expect the project to see the light of day.
“Costs are very high, the terrain is very difficult, and security is a major issue,” said Harry Verhoeven, a Sudan expert and researcher at Oxford University.
Sudan heavily pumped the oil fields while it was in charge. Oil output is now expected to fall to 200,000 bpd by 2016, to 160,000 bpd by 2018 and further after that, according to a study by the European Coalition on Oil in Sudan.
To cut the umbilical cord with the north, Juba would need to build new processing plants in Upper Nile and Unity state to halt reliance on those on the northern side of the border.
“Many Western donors tell Kiir that the Kenyan pipeline won’t work,”
said a foreign expert with close ties to Western donors. “They tried talking him out of the oil shutdown.”
GAME OF BRINKSMANSHIP
Emboldened by Western criticism of Bashir following his indictment by the war crimes court, South Sudan officials feel they can be tough in the deadlocked oil talks, which are sponsored by the African Union.
Kiir and Bashir met on the sidelines of an AU summit in Addis Ababa to discuss an interim deal that “would have frozen the situation and reversed the unilateral actions that had been taken by both”, a source close to the talks said.
But, the source said, talks broke down when Kiir pulled out.
“The Arab Spring has reinjected life into that old idea that Khartoum is about to fall,” Verhoeven said, adding that some in Kiir’s SPLM believed “the likelihood of a revolution in Khartoum has increased and therefore they are more intransigent”.
A Western diplomat agreed: “There is a belief in the SPLM that Bashir might be gone soon so they can sit him out with an oil deal. But Bashir might actually stay. You never know.”
Bashir is facing an economic crisis and high food inflation after losing the southern oil fields. The north’s remaining output of 115,000 bpd serves only domestic consumption.
Sudan is also taking a hard line with Juba and demanding not just concessions on the pipeline fee but also on the issues of sharing debt and giving financial aid, diplomats say.
POWER AND PRIVILEGE
Setting up a fledgling state in South Sudan and disentangling the two oil industries was a big enough headache, but corruption and cronyism has also severely hindered development, particularly in rural areas.
Juba bustles with gleaming Toyota Land Cruisers and Hummers parked in front of ministries or expensive restaurants on the banks of the Nile, ostentatious signs of status and power.
Kiir’s cabinet is mainly made up of ex-guerilla commanders and senior SPLM members, who led the civil war with the dominant Dinka tribe holding the key levers of power.
“They don’t use the potential of many South Sudanese who studied abroad and are well-educated,” a foreign executive said.
“If you don’t have ties to the SPLM you struggle to get a senior job,”
he said in Juba. “Some even look down on people who stayed abroad during the war as traitors.”
Euphoria that erupted across the south over independence also masked deep tribal and ethnic splits that grew in the vast Jonglei state where the government hopes for big oil finds.
The Lou Nuer tribe marched on rival Murle settlements in December killing hundreds of people and sparking bloody revenge attacks. Tribal violence started out as revenge for cattle raiding, but critics say years of administrative neglect in Jonglei, the same size as England, are also to blame.
“They never used to kill women and children. Something has gone very wrong. Maybe our politicians are to blame,” said Mary Buyoi, a famous singer and peace ambassador for the Murle tribe.
BORDER WARS
With the money expected to be exhausted within the next few months, Juba will have no choice but to restart oil production to maintain cohesion even if no deal is reached with Khartoum.
Flexing their muscle, Sudan’s officials say they will carry on helping themselves to oil from South Sudan that arrives at Port Sudan as long as the dispute is unresolved.
“The shutdown is their decision. But as long as they don’t sign, we will continue lifting what we think is our right,” Sudan’s Foreign Minister Ali Ahmed Karti said.
Sudan and South Sudan have broadened the oil talks by linking them to a bigger deal to end violence in the border area and find a solution for the disputed border region of Abyei.
Abyei was meant to have a referendum like South Sudan, as agreed under the 2005 peace deal. But the prospect of a vote was dashed after Khartoum took Abyei in May just before Juba’s independence, forcing tens of thousands to flee to South Sudan.
Shops and homes were looted, and residents said that their huts were burned down, raising fears of a fresh north-south conflict. Kiir condemned the seizure of the border region but at the time refused to be drawn into war.
But with both sides daggers drawn over the crucial oil revenue-sharing, several Africa watchers see another war as a distinct possibility.
Verhoeven, at Oxford University, said both would try to reach a deal but he saw a 20 percent chance that the tensions would lead to conflict.
“I think there’s a real chance this could go too far and there could be a border war,” he said. (additional reporting by Alexander Dziadosz; Writing by Ulf Laessing, editing by Peter Millership)
http://af.reuters.com/article/sudanNews/idAFL5E8D136T20120202?sp=true
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4. Sudan’s VP threatens army strike on Juba
January 27, 2012 (KHARTOUM) – The second Vice-President of Sudan, Al-Haj Adam Youssef, has warned that his country’s army could strike as far as South Sudan’s capital Juba in pursuit of hunting rebels operating in South Kordofan and Blue Nile.
Youssef was quoted on Thursday by the liberal daily newspaper Al-Sahafah as saying that the Sudanese Armed Forces was besieging rebel fighters of the Sudan People’s Liberation Movement North (SPLMN) in the country’s southern states of South Kordofan and Blue Nile.
Sudan’s army has been fighting SPLMN rebels in the two states bordering South Sudan since last year. The rebels fought as part of South Sudan’s army during the war with Sudan but they rejected Khartoum’s attempt to disarm them by force following South Sudan’s independence, leading to the outbreak of the war in the two states.
The Sudanese vice-president said that the government’s patience was wearing thin towards South Sudan’s ruling party, the Sudan People’s Liberation Movement (SPLM), which Khartoum accuses of backing the rebels.
Youssef vowed that SAF would pursue the rebels into South Sudan and as far as its capital Juba.
“If necessary, Juba is not far,” he told the paper during celebrations of Sudan’s independence in the central state of Al-Jazzirah.
The SPLM in Juba denies supporting the rebels but makes no secret of its sympathy with its former comrades in arms.
Sudan’s army continues to carry out aerial bombardment in South Kordofan and Blue Nile. It also attacked some parts inside the borders of South Sudan on several occasions.
UN agencies estimate that some 417,000 civilian were forced to flee the war zones in the two states. It is also estimated that over 80,000 refugees are now in South Sudan.
In a related vein, Youssef said that the ongoing talks in Addis Ababa between Sudan and South Sudan are not only about the transit fees the South should pay to export its oil through Sudan’s territories, but are about all the aspects of relations between the two countries.
This month Sudan’s foreign minister Ali Karti said that the two countries are unlikely to reach a deal on oil without a parallel deal on border security and cessation of South Sudan’s alleged support to the rebels.
(ST) http://www.sudantribune.com/Sudan-s-VP-threatens-army-strike,41430
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5. Kiir explains South Sudan’s refusal to sign oil deal with Khartoum
February 1, 2012 (JUBA)- South Sudan president, Salva Kiir Mayradit, on Tuesday told fellow heads of state at the (AU) summit that his country refused to sign a proposed deal on oil with neighboring Sudan because the deal failed to comprehensively address the fundamental causes of the crisis.
Head-to-head talks held earlier this week between Kiir and his Sudanese counterpart Omer Al-Bashir on the margins of the AU summit in Addis Ababa failed to resolve the bitter row that erupted between the two countries over oil revenues.
The talks reportedly collapsed after Kiir refused to sign a deal proposed by mediators of the African Union High Level Panel (AUHIP) led by former South African President Thabo Mbeki.
If signed, the deal would have seen South Sudan reversing its decision to halt oil production in response to Khartoum’s sequestration of its crude, and the latter receiving from Juba $4 billion over the next five years as well as 35,000 barrels per day for the use of refineries.
Addressing the 18th AU Assembly, Kiir said the proposed agreement was “vague on several issues” and that the “transitional financial provisions were not in line with what we anticipated.”
He further explained that the deal “tied the Republic of South Sudan to urgently provide cash and oil to the government of Sudan without first addressing the issues that made us reach this point”.
The dispute over oil escalated as the two countries failed to agree on a fair charge to export oil produced by the landlocked South Sudan through Khartoum’s pipeline infrastructure to Port Sudan.
Khartoum, citing Juba’s failure to pay transit fees and lack of its will to reach an agreement, moved to confiscate South Sudan’s oil, saying it was only taking Sudan’s right.
Juba accused Khartoum of stealing oil revenues amounting to US$850 million. It later moved to shutdown oil production and explores options for transporting South Sudan’s oil through another route.
In his address, Kiir said South Sudan’s decision to halt oil production was prompted by Khartoum’s unilateral decision to enact a bill levying a fee of US$32.20 per barrel on South Sudan oil that passes through its territory.
According to the South Sudanese president, Khartoum-demanded fee is “completely out of international norms.”
Kiir said that the AU must understand that South Sudan had “no objection to paying Khartoum for the use of their infrastructure,” but only within bearable cost limits despite “the violation of the sovereignty of South Sudan.”
South Sudan seceded from Sudan under a 2005 peace deal that saw the two sides evenly splitting 500,000 barrels of oil produced from fields mainly located in South Sudan.
But South Sudan took with it over 75 percent of that production when it seceded in July last year, leaving Khartoum to struggle with an economic crisis.
“Khartoum began diverting and confiscating our oil by force. We acknowledge that most of the oil infrastructure lies on the territory of Sudan; however the oil clearly belongs to South Sudan. This unilateral decision to take our crude entitlements is unmistakably a violation of the sovereignty of South Sudan and must be condemned”, Kiir told the AU summit.
Kiir addressed Sudan’s claims that his country was not paying fees, saying Juba had been paying transit fees to oil companies but Khartoum wanted the fees to be paid directly to its treasury rather than to a third party.
He went on to accuse Khartoum of constructing a “tie-in pipeline designed to permanently divert almost 75percent of our daily entitlements,” saying that the move also aims to “coerce us into signing the cover agreement presented by the AUHIP.”
Kiir suggested that an agreement should have addressed outstanding issues of the Comprehensive Peace Agreement, including border issues and the status of the hotly contested region of Abyei. Kiir further said that the issues of payment should be settled “through an independent transparent committee” made up of nominated committees from both countries and a third nominated by the AU. This committee would “audit and ensure that payments are transparently made,” he added.
Kiir returned from the summit to rapturous applause in Juba, South Sudan’s capital.
Stephen Dhieu Dau, South Sudan’s oil minister, on Wednesday confirmed that Khartoum has only released four oil tankers, which were the first to be detained in last December.
He said 600,000 barrels from the oil which the Sudanese government confiscated from entitlements belonging to his country were loaded onto ships belongs to Sudanese buyers on Tuesday.
“They are continuing to sell our oil to their buyers. They are still preventing our buyers whose ships were in the international waters to come and load our entitlements because they thought Sudanese government had released all what was confiscated”, Dau told Sudan Tribune.
(ST) http://www.sudantribune.com/Kiir-explains-South-Sudan-s,41476
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6. Attached please find President Salva Kiir’s speech to the AU, 28th January 2012.
7. South Sudan wants more talks to end oil transit row
Thu Feb 2, 2012 12:23pm EST
* Transit row worsening as countries try to disentangle oil industries * South Sudan took three-quarters of oil when became independent * Needs to pay for using pipelines and Port Sudan
JUBA, Feb 2 (Reuters) – President Salva Kiir said on Thursday South Sudan wants to end a row with Sudan over oil transit payments but has rejected a proposal requiring Juba to pay billions of dollars and keep exporting crude through the neighbouring country.
The two neighbours are locked in a worsening row over disentangling their oil industries after the South split from Sudan and became independent in July, following decades of civil war that ended with a peace deal in 2005.
The landlocked new nation took three-quarters of the oil production – the lifeblood of both economies – but needs to pay for using northern pipelines and the Red Sea port of Port Sudan.
Tension rose when Sudan said last month it started seizing southern oil as compensation for what it called unpaid pipeline transit fees. South Sudan responded last week by shutting down its entire output of 350,000 barrels a day.
On Friday, Kiir met Sudanese President Omar Hassan al-Bashir on the sidelines of an African Union (AU) summit to discuss oil but failed to reach a deal.
Kiir said he had rejected at the meeting a draft agreement by the AU because it would have required Juba to keep selling oil from some fields through Sudan’s export facilities.
“It is difficult for me to accept a deal that leaves our people vulnerable, dependent and paying billions they do not owe,” Kiir said, according to the text of his speech published by the government.
NEGOTIATIONS
The agreement would also have required South Sudan to supply 35,000 barrels a day to Sudan’s refineries, he said.
The value of the oil would be deducted from payments of $5.4 billion South Sudan also would have to make under the proposal to help Sudan cope with the loss of southern oil.
Kiir said the agreement had also not covered other conflicts such as marking the joint border and finding a solution for the disputed region of Abyei.
“I want to be clear that the Republic of South Sudan is committed to continue negotiations but we would also be wise to pursue efforts to enhance our economic self-sufficiency, prosperity and national security should we not find common ground with Khartoum for now,” he said.
South Sudan said last month it would build an alternative pipeline to Kenya within eleven months to end dependency on Sudan’s facilities.
But analysts are sceptical the project will take off because it would have to cross rough terrain and may not be viable.
Sudan accused South Sudan on Wednesday of being “hostile” towards Khartoum in the oil talks. (Writing by Ulf Laessing; Editing by Sophie Hares)
http://www.reuters.com/article/2012/02/02/sudan-south-oil-idUSL5E8D26M620120202
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8. South Sudan rejects African Union oil plan
January 31, 2012 6:03 pm
FT
By Katrina Manson in Nairobi and William Wallis in Addis Ababa
South Sudan’s chief negotiator has rejected African Union-backed proposals that could see it pay up to $6.5bn to Sudan in the latest attempt to break a vicious deadlock between the two over sharing oil revenues.
The impasse, which reached a head at the weekend when AU-mediated talks collapsed at a summit in Addis Ababa, threatens to reignite conflict between the former enemies.
South Sudan, which seceded from Khartoum last July after decades of civil war, has shut down its 350,000-barrel-a-day production, forcing its top buyers, China and Japan, to seek crude elsewhere. The shutdown came after Khartoum unilaterally seized oil shipments claimed by the south.
The latest draft proposal from the African Union, given to both sides and obtained by the Financial Times, foresees the less developed South giving Sudan a direct cash transfer of between $2.6bn and $5.4bn, plus transit fees worth up to $1.1bn, covering the period until the end of 2014. The AU set these figures as parameters for discussion, with an exact figure to be decided on within 30 days.
Khartoum has said it is happy to sign the deal and blamed South Sudan’s intransigence for the failure to reach agreement.
The payment is to compensate Sudan for losing three-quarters of its oil production as a result of the split, and for the South’s use of pipelines, processing and export facilities that run through Sudan.
Pagan Amum, lead negotiator for the South, told the Financial TImes: “The AU has lost sight of the principle of mutual economic viability.”
He added that the South must now develop an alternative pipeline and refining capacity.
“We could not sign; they were stealing the oil and obstructing the flow of our oil, and this robbery continues up to today. Now it is not secure for us to put our oil through Sudan because of this state piracy. This is about our economic independence. No country can continue through a country that is hostile.”
Mr Amum is seen as a hardliner in the ruling Sudan Peoples’ Liberation Movement in South Sudan.
Both countries depend on oil for their livelihoods and have adopted increasingly entrenched stances in their attempt not to lose out.
Khartoum says it confiscated southern oil in lieu of transit payments that the South says it does not owe, prompting the southern Juba government to turn off the taps.
Mediators from the region and beyond are increasingly exasperated with both parties. “They [the South] have done damage to political and investor confidence,” an AU official close to the talks said, referring to the unilateral move to shut oil production and to walk out of the talks.
He added that it was not clear how Juba could pay the army with oil revenues drying up. Another AU official described the two parties as equally intransigent.
Mr Amum said the upper range of the AU proposals would see the South – which depends on oil for 98 per cent of its revenues – forfeit up to $6.5bn, equivalent to 97 per cent of the financing gap created by Sudan’s loss of oil that was identified by the IMF.
The South previously offered to meet a third of the financing gap, hoping donors and Khartoum itself would take up the slack. Mr Amum said the latest proposed payments, staggered until 2014, would mean the cash-strapped South would pay 117 per cent of the gap in 2012 alone.
Both sides may be over-reaching their negotiating positions because sovereignty is also at stake. The South wants a grand package that would secure for it the contested territory of Abyei and other disputed border areas as part of a settlement over oil.
Khartoum is unlikely to withdraw its own claims on Abyei and other border areas, where it has launched a series of aerial attacks in recent weeks and months.
“Now they [AU] are pushing us on Abyei and the border. The issues of sovereign territory of the South are being pushed off the table by the panel because Khartoum does not want to discuss these things,” said Mr Amum.
“In that situation there is nothing that we can do other than keep the oil in the ground, so it remains for our future generations.”
Some observers fear that oil wells in the six producing blocks that have been shut down may become too depleted to start up again.
Mr Amum said a “litany of bad practices”, such as over-pumping by Khartoum in previous years, had “compromised production”.
NEGOTIATIONS STUCK IN THE PIPELINE
Jan 24: AU proposal
–Cash transfer in the range of $2.6bn to $5.4bn. Set aside arrears negotiations for later.
–South Sudan to supply Sudan with up to 35,000 barrels a day on loan.
Jan 25: South Sudan’s response
–$1.7bn cash transfer.
–Transit fees of $0.69 and $0.63 per barrel for each of the two pipelines.
–Parties to agree additional arrears and claims.
–The South also said it would restart production only if Sudan undertook measures including the release of detained vessels and the repayment of the value of confiscated and diverted crude oil.
Jan 27: Sudan’s response
–$5.4bn direct cash transfer from the South.
–$3-a-barrel transit fee.
–Sudan also said the South must revoke a presidential order confiscating participating interests and assets of Sudapet, Sudan’s state oil company.
END8
9. Sudan says South Sudan “hostile” in oil row
Wed Feb 1, 2012 6:37pm GMT
KHARTOUM Feb 1 (Reuters) – Sudan, stepping up its rhetoric, accused South Sudan of “hostility” in their row over oil transit fees and said it would hold Juba responsible for any attack on northern oil facilities, a state-linked news website said on Wednesday.
The two neighbours are locked in a worsening row over disentangling their oil industries after the South split from Sudan and became independent in July, following decades of civil war that ended with a peace deal in 2005.
The landlocked new nation took three-quarters of the oil production – the lifeline of both economies – but needs to pay for using northern export facilities and the Red Sea port of Port Sudan.
Tension rose when Sudan said last month it started seizing southern oil at Port Sudan as compensation for what it called unpaid pipeline transit fees. Juba, the southern capital, responded last week by shutting down its entire output of 350,000 barrels a day.
The African Union has been trying to broker a deal but a meeting between Sudanese President Omar Hassan al-Bashir and his southern counterpart Salva Kiir failed last week. More talks are scheduled for next week.
The Sudanese negotiation team said South Sudan had not been ready to reach a fair deal at the latest round of talks in Addis Ababa, the state-linked Sudanese Media Centre (SMC) said, citing a statement issued by the delegation after its return.
“The Government of Sudan … called on the southern government to review its hostile leaning towards Sudan,” the SMC said, adding that Sudan remained ready to continue talks in “good faith.”
Sudan also again accused Juba of supporting rebels in the main northern border state of South Kordofan, the SMC said.
“The Government of Sudan will hold the government of South Sudan responsible for any attempt to target or sabotage oil fields, facilities and oil infrastructure,” SMC said, without elaborating.
There was no immediate reaction from Juba. South Kordofan is home to much of Sudan’s remaining oil industry after the split.
Fighting broke out in June between the Sudanese army and rebels of the SPLM-North, and clashes spread to Blue Nile in September. Both states border South Sudan.
Blue Nile and South Kordofan contain large groups who sided with the south in the civil war, and who say they have continued to face persecution inside Sudan since South Sudan seceded.
The SPLM is now the ruling party in the independent south and denies supporting SPLM-North rebels across the border.
Events in South Kordofan and Blue Nile are difficult to verify because aid groups and foreign journalists are banned from areas where fighting takes place.
SPLM-North is one of a number of rebel movements in underdeveloped border areas who say they are fighting to overthrow Bashir and end what they see as the dominance of the Khartoum political elite.
The fighting has already forced about 417,000 people to flee their homes, more than 80,000 of them to newly independent South Sudan, according to the United Nations. (Reporting by Ulf Laessing and Khalid Abdelaziz; editing by Tim Pearce)
http://af.reuters.com/article/sudanNews/idAFL5E8D15ZZ20120201?sp=true
END9
10. Sudan blames Juba’s “negative attitude” for failure of oil talks
February 1, 2012 (KHARTOUM) – Sudan has attributed the failure of the latest round of talks with South Sudan on oil to Juba’s “negative attitude,” accusing its southern neighbors of plotting to topple the government in Khartoum.
In a statement circulated to the media on Wednesday, Sudan’s negotiating team expressed disappointment at the failure of the latest round of talks, which took place between 17 and 28 January in the Ethiopian capital Addis Ababa under the mediation of the African Union High Level Pane (AUHIP) led by former South African President Thabo Mbeki.
The two countries have been negotiating for months to reach a deal on a fair charge to transport oil produced by the land-locked South Sudan through Sudan’s pipelines.
But as the talks dragged on and the gap remained wide, Khartoum moved to confiscate South Sudan’s oil, prompting the latter to accuse it of “stealing” oil revenues amounting to US$850 million. Juba later decided to suspend oil production all together and seek an alternative route to transport its oil.
Sudan’s statement said that members of its negotiating team had come to the negotiation table with every intention of reaching an agreement unlike their South Sudanese counterparts who sought to abort all possibilities of solutions.
The statement claimed that the South Sudanese government was “in fact seeking to create a crisis” through a flurry of “negative comments’ by the head of its negotiating team, Pagan Amum, as well as the decision to halt oil production while negotiations were in progress.
“The Government of South Sudan was not willing to reach a fair agreement,” the statement said, adding that this “negative attitude”
had culminated in South Sudan’s decision to reject a deal proposed by the AUHIP to end the dispute within one month.
South Sudan’s president Salva Kiir Mayardit rejected to sign the AUHIP-proposed deal following head-to-head talks with his Sudanese counterpart Omer Al-Bashir on the margins of the AU summit in Addis Ababa earlier this week.
Kiir later said that the proposed agreement was “vague” on some issues and fell short of meeting South Sudan’s anticipation.
If signed, the deal would have seen South Sudan reversing its decision to halt oil production in response to Khartoum’s sequestration of its crude, and the latter receiving from Juba $4 billion over the next five years as well as 35,000 barrels per day for the use of refineries.
Kiir also suggested that the deal failed to address in holistic terms the fundamental causes of the crisis between the two countries which, according to Kiir, go beyond oil to include disputed border territories such as the hotly contested region of Abyei.
However, Sudan’s statement considered the inclusion of other issues such as Abyei as part of “the insurmountable preconditions” created by South Sudan to scuttle attempts to reach an agreement.
Furthermore, the statement said that the goal of this intransigence, “as GoSS mistakenly believe”, is to prepare the ground for changing the regime in Khartoum through the south’s northern proxy agents of the Sudan People’s Liberation Movement North (SPLMN) in collaboration with Zionist lobby groups in the United States and other Western circles that harbor hostility towards Sudan.
Sudan routinely accuses Juba of supporting the SPLMN rebels who are fighting the government in South Kordofan and Blue Nile, and who fought as part of the southern army in the war against Khartoum which ended with a 2005 peace deal that paved the way for South Sudan’s independence in July last year.
Juba denies supporting its former comrades in arms and counter accuses Khartoum of supporting southern rebel groups.
The Sudanese statement further warned that Khartoum would hold South Sudan responsible for any attempt to destroy oil production facilities belonging to the Sudanese government, particularly the Greater Nile Oil Pipeline which runs through South Kordofan.
“As known to everyone, the rebels in South Kordofan and Blue Nile are receiving full support from South Sudan which organizes training camps for them on its territories”
The statement cited President Al-Bashir’s decision to release four impounded vessels containing South Sudan’s oil as a gesture of good will and evidence of Sudan’s desire to reach an agreement.
The statement concluded that the Government of Sudan will continue to negotiate in good faith and urged GoSS to reconsider its hostile attitudes towards Sudan.
(ST) http://www.sudantribune.com/Sudan-blames-Juba-s-negative,41481
END10
11. Bashir confirms release of South Sudan’s oil shipments
January 29, 2012 (KHARTOUM) – The Sudanese president Omer Al-Bashir on Sunday confirmed that his country has released impounded oil shipments of South Sudan, urging acceleration of diplomatic efforts to resolve the dispute.
The release of the shipments was promised by Al-Bashir earlier on Saturday following the collapse of his direct talks on the margins of the ongoing IGAD summit in Ethiopia with South Sudan’s President Salva Kiir Mayardit regarding the oil crisis that brought their recently-separated countries to the brink of economic war.
Al-Bashir on Sunday told Meles Zenawi, Prime Minister of Ethiopia, that South Sudan’s oil shipments had been released and they already sailed out of Port Sudan into the regional and international waters.
Sudan has been holding the shipments since September last year because of it calls Juba’s failure to pay any fees for transporting its crude through Sudan’s pipeline infrastructure since South Sudan seceded in July.
Khartoum says it took the unilateral decision to confiscate southern oil after Juba appeared to be uninterested in striking a deal on a fair charge to export its oil through Sudan.
But South Sudan accused Khartoum of “stealing” oil revenues amounting to $815 million, and later moved to shut down oil production in protest, triggering a diplomatic frenzy as regional and international stakeholders rushed to contain the dispute.
Months of negotiations under the mediation of the African Union High-Level Panel led by former South African President Thabo Mbeki failed to reach a deal.
Hopes for a deal to be reached during talks between Al-Bashir and Kiir had also dissipated despite prior announcements by Zenawi that the pair were about to create a breakthrough.
South Sudan said it would not reverse decision to suspend oil production unless Khartoum releases the impounded shipments and reimburses it for the confiscated oil.
A southern official quoted by Reuters on condition of anonymity this week said that Juba would be waiting for confirmation from the shipping companies that the vessels were allowed to sail out of Port Sudan.
Sudan Tribune has learned that Al-Bashir asked Zenawi to expedite the process of tabling the proposals of the AUHIP before the two sides in order to reach a settlement to the dispute.
The next round of talks is scheduled for February 10 to resume discussions on the AUHIP proposals which, according to diplomatic sources, would allow South Sudan to export its oil without any portion of it being confiscated by Khartoum.
The proposal would also see South Sudan provide Sudan with the 35,000 barrels per day for its refineries in Khartoum and elsewhere as well as $4 billion to cover the gap in Khartoum’s budget.
Similarly in Khartoum, the undersecretary of the oil ministry, Awad Musa, told foreign diplomats that the vessels had indeed left Port Sudan on Sunday morning.
Mutrif Sidiq, a member of Sudan’s negotiating team, cited the release of the shipments as an example of how Khartoum has been reacting positively to proposals from the mediation. Sidiq added that Khartoum had made a number of gestures of good will.
(ST) http://www.sudantribune.com/Bashir-confirms-release-of-South,41450
Reec Akuak
Vice President
The South Sudanese Community, USA
Growth — Development — Community
202.656.TSSC (8772)
Direct/Cell: 202.596.6009
Fax: 202.280.1007
R.Akuak@TSSC.us
www.TSSC.us
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