Posts Tagged ‘bitter civil war’

Riek Machar: South Sudan ‘will survive’ without oil revenues

The vice president of South Sudan, Riek Machar, has told the BBC that his country will survive, despite halting its vital oil production in a dispute with Sudan over oil transit rights.

Oil revenues account for 98 per cent of the government’s income.

James Copnall spoke exclusively to Riek Machar.

South Sudan can cope without oil, says Vice-President Machar

Riek Machar: “We hope within 30 months maximum, the oil revenue will flow again”

South Sudan will survive despite halting its vital oil production in a dispute with Sudan, the country’s Vice-President Riek Machar has told the BBC.

Oil revenues account for 98% of income for the country, which gained independence from Sudan last year.

But the two never agreed on the transit fees that Juba should pay for using Sudan’s oil export infrastructure.

Mr Machar said development would be put on hold for several years, but basic services would not suffer.

He said government salaries, including for those for members of the large military, would be paid.

“For a period of 30 months we will definitely freeze our activities on development, but we’ll provide basic services: health, education, water and even some infrastructure projects will go on,” he said.

South Sudan and Sudan fought a bitter civil war for decades in which some 1.5 million people died.

Before halting production last month, South Sudan accused Sudan of stealing oil worth $815m (£518m).

“Unfortunately Khartoum has not co-operated with us, so instead of Khartoum taking the oil, we’d better freeze it until we get alternatives to exporting oil, so that people of South Sudan can enjoy their own resources,” Mr Machar said.

He dismissed the view of Sudan’s President Omar al-Bashir that war between the two nations was closer than peace.

But he admitted there was no immediate prospect of the two countries coming to an agreement on the many issues that divide them.

Satellite image showing geography of Sudan, source: Nasa

The great divide across Sudan is visible even from space, as this Nasa satellite image shows. The northern states are a blanket of desert, broken only by the fertile Nile corridor. South Sudan is covered by green swathes of grassland, swamps and tropical forest.

Sudan and South Sudan Fail to End Oil Dispute


Published: February 17, 2012

KHARTOUM, Sudan — Negotiations between Sudan and South Sudan over billions of gallons of oil have ended with very little progress, prolonging a dispute that is undermining the fragile economies of both nations and straining the tenuous peace between them after decades of war.

“There was nothing new,” Yahia Hussein, a member of Sudan’s negotiating team, said Thursday after returning from the Ethiopian capital, Addis Ababa, where the negotiations were being held.

Sudan and South Sudan have been locked in a series of talks since the south seceded and became independent last July. The highly volatile issues to be resolved include the demarcation of the border separating the nations, the status of citizens in each country and, most thorny of all, oil.

Most of the oil is in South Sudan, a landlocked nation, so the pipelines and the facilities to export it are in the north, requiring the two sides, which fought one of Africa’s longest and deadliest civil wars, to cooperate.

Both nations depend enormously on the oil revenues, but the distance between them is wide. Sudan is demanding a $36 per barrel fee, citing the costs of processing the oil and various fees and services. South Sudan says that it would pay only the transit fees, putting the cost at $3 per barrel.

Last month, South Sudan stopped its oil production in protest, accusing Sudan of stealing $815 million worth of oil and announcing that it would seek to construct alternative pipelines to Kenya and Djibouti. Sudan argued that it was taking its fees “in kind” because it had not received any payments for transit since July.

Mr. Hussein, the negotiator, stated that the government of South Sudan “was willing to start re-exporting its oil through Sudan on the condition of reaching a final agreement.”

But Nhial Deng Nhial, South Sudan’s foreign minister, appeared to be less optimistic.

“The gulf is still huge,” he said in a statement, according to Agence France-Presse. “I don’t know if it can be bridged.”

Abdelwahab El-Affendi, a professor at the University of Westminster in London, said oil would be the most difficult issue to resolve. “The southern leadership has unleashed powerful nationalist sentiments over the oil issue, which would be difficult to contain and would constrain the leadership’s ability to make concessions in the short term,” Professor El-Affendi said.

Still, negotiations over the borders seem to have achieved some progress. Mr. Hussein said the two sides had agreed to start marking the borders immediately, an process that should take about three months.

Sudan and South Sudan share a long border with a number of disputed areas. Seeking to calm fears of renewed conflict, Sudan and South Sudan signed a nonaggression agreement last Friday, but just days later South Sudan accused Sudan of bombing a border town and killing four soldiers, an accusation Sudan denies.

The two sides must also deal with matters of citizenship. In April, at the end of an initial transition period, South Sudanese who live in Sudan will be classified as foreigners, and vice versa. Tens of thousands of South Sudanese seeking to go south have been stuck in the river city of Kosti, and South Sudanese officials accuse Sudan of hindering their return. Mr. Hussein denied the charge.

The African panel that has been mediating the talks under the leadership of former President Thabo Mbeki of South Africa had helped improve the “mood of talks,” Mr. Hussein said.

“There was less verbal abuse from their side,” he said, smiling.

At some point, Professor El-Affendi said, the negotiators will have to deal with the conflicts in the Sudanese states of Blue Nile and South Kordofan, which share borders with South Sudan and whose leaders have historical ties with the regions.

But, he said, “this war is not even on the agenda in the Addis Ababa talks, since it is regarded as an ‘internal issue’ for the north,” he said. The problem, he noted, is that “when the real issue is not talked about, you cannot hope to resolve other issues.”

Last year, conflict in both states broke out when rebels who previously fought with the south took up arms against the Sudanese government in Khartoum. Sudan accuses South Sudan of supporting them. Without a cease-fire in those conflicts, “not much progress can be hoped for,” Professor el-Affendi said.

A new round of negotiations has been set for the end of this month.

Energy Resources: South Sudan oil shutdown pushes up prices 

Published: Feb. 17, 2012 at 3:04 PM

JUBA, South Sudan, Feb. 17 (UPI) — South Sudan’s 3-week-old shutdown of its oil industry in a dispute over oil revenues with the fledgling state’s former leaders in Khartoum is likely to drag on and push up global oil prices.

“Investors trying to understand why oil prices are so high have long been focused on Iran,” the Financial Times observed. “But rather than looking at supply disruptions stemming from the Strait of Hormuz, they need to turn their eyes to South Sudan.”

Until the Jan. 25 shutdown, South Sudan, which became independent last July 9 after decades of civil war, was producing only 260,000 barrels per day, a mere 0.3 percent of global production last year.

But that tally is deceptive, the Financial Times said.

“South Sudan produces a particular kind of crude sought by Asian importers due to its low sulfur and high waxy content,” the newspaper reported.

“The loss could not have come at a worse time as the demand for the African nation’s two crude oil export grades — known as Dar Blend and Nile Blend — is stronger than ever this year due to power shortages in Japan, which are forcing utilities to burn unrefined crude, and a strong fuel oil market in the Asia-Pacific region.

“The loss of South Sudanese oil has forces China and Japan, traditionally big consumers of the country’s oil, to shop elsewhere, pushing up the premiums of the physical market.”

Oil prices hit a 6-month high of $120 per barrel Wednesday over concerns that Iranian crude exports may be cut off. Iran is the world’s third largest oil exporter after Saudi Arabia and Russia.

With Iran’s oil supplies being steadily eroded by U.S. and European economic sanctions, tightening U.N. measures against Tehran over its refusal to abandon its contentious nuclear program, the Chinese have concentrated on seeking alternative crude suppliers. So have the Japanese and Indians.

Iran has threatened to block the strategic Strait of Hormuz, the gateway to the Persian Gulf, thus threatening to cut one-fifth of the world’s oil supplies and to cut off supplies to European customers.

But, as with South Sudan, an insignificant producer, political instability in Nigeria, which included an attack on oil facilities in the southern Niger Delta region, and even in Yemen, another minor producer whose output is threatened by political upheaval, has caused global jitters about oil supplies.

Meantime, Libya’s production is well below the level of 1.6 million barrels per day it was producing before the uprising against Moammar Gadhafi erupted Feb. 17, 2011, although it’s recovering steadily.

Libya’s low sulfur crude is also highly prized at refineries in Europe, Libya’s main oil customer. That’s added to the growing shortage of this category.

China has secured supplies of low-sulfur crude from Angola, Africa’s top producer, while Japan has gone to Vietnam for its Su Tu Den crude, adding to the upward pressure on prices.

“The market is bracing for a long-lasting disruption” in South Sudan, the Financial Times noted.

Even if South Sudan and Khartoum do manage to reach an agreement on revenue-sharing following the south’s secession, and given the hostility between them that’s a distant prospect, it will take weeks to get the pipeline system that carries southern crude northward to the Port Sudan terminal on the Red Sea functioning again.

South Sudan’s national oil company says it could restart production in a few days but reinstating the 1,000-mile pipeline is a more complicated process.

“Oil traders involved in South Sudanese crude say the country would need between three and five months to restart production, as at a cost of $300 million,” Financial Times Commodities Editor Javier Blas reported Monday.

The International Energy Agency, the Western consumers’ watchdog, estimates that South Sudan’s pre-shutdown won’t recover until the fourth quarter of 2012 at the earliest.

“Traders fear a more lasting disruption, with South Sudan production running at zero for the remainder of the year,” Blas reported.

Saudi Arabia, which has pretty much all the spare global production capacity, has said its maximum output is 12.5 million bpd, enough to cover any shortfall. But the IEA said in its latest monthly report for February that the kingdom’s maximum output was 11.88 million bpd because of declining oilfield production.

That may not seem much of a difference but it will be if a major supply crisis occurs.

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