Opinion / Columnist
Sudan political relations on 'shaky ground' as China feels the pinch...
31 Jan 2012 at 08:28hrs | Views
A landmark development in July 2011 led to the creation of a new state in Africa as South Sudan became an independent state under a 2005 peace deal that ended decades of civil war. Sudan's war was fought for most years from 1955 to 2005 over issues of ethnicity, religion, ideology and oil and an estimated 2.0m people died in the conflict. After Southerners voted overwhelmingly to secede in a referendum held in January 2011, South Sudan was "formed". This, therefore, left the new nation with about 75% of the roughly 0.5m bpd oil production. Given that oil is the lifeline of both countries' economies, Sudan was been scrambling for ways to bolster its finances after the break-up.
In what appears now to be a "dog eat dog scenario", disputes have been looming between the two states over an agreement on oil transit fees.
The former civil war foes have failed to agree the value of the fee landlocked South Sudan should pay to pump oil north by pipeline for export from Port Sudan. In fact, the dispute heated up this month when Sudan confiscated some oil exports from South Sudan to make up for what it called unpaid fees. In response, South Sudan has shut off crude supplies to Sudan.
In recent move aimed at defusing a dispute over export transit fees, Reuters reports that Sudan has released four tankers loaded with South Sudanese oil (3.5m barrels). Separately, Sudan has sold off at least one tanker of crude seized from the South and has offered two other cargoes.
"We are ready to continue these talks and to prove it, we are... releasing vessels in Port Sudan to allay fears," senior Khartoum official Sayed alKhatib told Reuters in Addis Ababa, where the talks are being held. "The vessels will be free to leave immediately," al-Khatib added. In addition, Khartoum (Sudan) admits to having confiscated 1.7m barrels of South Sudan crude, a measure it said was to compensate for Juba's use of its pipeline and refinery. "This oil was indeed developed when Sudan was one country and therefore all of the Sudanese people need to reap the benefit of it," al-Khatib said.
China, which relies on South Sudan for nearly 5.0% of its oil and is also a key ally of the Khartoum government, has been supporting negotiations between the two sides. China also has major interests in oil and infrastructure building in Sudan and South Sudan. There are over 100 Chinese companies and 10,000 personnel working in both north and south Sudan. Conflict in the region could therefore imply security threats for the Chinese.
Meanwhile, South Sudan has signed an agreement with Kenya to build an oil pipeline to a Kenyan port, potentially freeing it from its dependence on exporting oil through Sudan. However, industry experts opine that building a pipeline could take more than three years and cost as much as USD 4.0bn -a staggering cost for the South. It has also been reported that the nation approached Ethiopia to build a pipeline connecting to the Red Sea state of Djibouti. While politics and oil or the politics of oil, is likely to continue appearing on major-news headlines, a conclusive agreement between the two states will be crucial in ensuring that an "oil-curse" will not erase the progress towards peace resolutions that we have seen in recent years.
In what appears now to be a "dog eat dog scenario", disputes have been looming between the two states over an agreement on oil transit fees.
The former civil war foes have failed to agree the value of the fee landlocked South Sudan should pay to pump oil north by pipeline for export from Port Sudan. In fact, the dispute heated up this month when Sudan confiscated some oil exports from South Sudan to make up for what it called unpaid fees. In response, South Sudan has shut off crude supplies to Sudan.
"We are ready to continue these talks and to prove it, we are... releasing vessels in Port Sudan to allay fears," senior Khartoum official Sayed alKhatib told Reuters in Addis Ababa, where the talks are being held. "The vessels will be free to leave immediately," al-Khatib added. In addition, Khartoum (Sudan) admits to having confiscated 1.7m barrels of South Sudan crude, a measure it said was to compensate for Juba's use of its pipeline and refinery. "This oil was indeed developed when Sudan was one country and therefore all of the Sudanese people need to reap the benefit of it," al-Khatib said.
China, which relies on South Sudan for nearly 5.0% of its oil and is also a key ally of the Khartoum government, has been supporting negotiations between the two sides. China also has major interests in oil and infrastructure building in Sudan and South Sudan. There are over 100 Chinese companies and 10,000 personnel working in both north and south Sudan. Conflict in the region could therefore imply security threats for the Chinese.
Meanwhile, South Sudan has signed an agreement with Kenya to build an oil pipeline to a Kenyan port, potentially freeing it from its dependence on exporting oil through Sudan. However, industry experts opine that building a pipeline could take more than three years and cost as much as USD 4.0bn -a staggering cost for the South. It has also been reported that the nation approached Ethiopia to build a pipeline connecting to the Red Sea state of Djibouti. While politics and oil or the politics of oil, is likely to continue appearing on major-news headlines, a conclusive agreement between the two states will be crucial in ensuring that an "oil-curse" will not erase the progress towards peace resolutions that we have seen in recent years.
Source - Imara Stockbrokers
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