Khartoum steals South Sudan’s oil, threatens war

Seven months after South Sudan declared independence from its northern neighbour, Khartoum continues to undermine the struggling new nation.

On January 20, the Sudanese People’s Liberation Movement (SPLM) government of South Sudan took the drastic measure of shutting down its entire oil production.

Sudanese President Omer Al Bashir’s National Congress Party (NCP) regime had been demanding enormous fees for transporting South Sudan’s oil to Port Sudan in the north for export.

Khartoum wanted US$32 a barrel, later raised to $36 ― more than one-third of the current price of oil ― and declared the fee would be retroactive.

South Sudan proposed a $1 transit fee per barrel, in line with international norms.

In December, Khartoum said it would not allow South Sudan’s oil to be moved from Port Sudan if the exorbitant fees were not paid. It blocked four ships carrying southern oil from sailing and prevented several other vessels from collecting purchased oil.

Khartoum confiscated 1.7 million barrels of southern oil, claiming it was recovering outstanding transit fees. Oil trading company Triafuga, infamous for dumping toxic waste in the Ivory Coast, allegedly purchased some of the stolen oil from Khartoum.

On January 23, South Sudan President Salva Kiir said: “The revenue that the government of Sudan has looted since December amounts to approximately $815 million.”

South Sudan has accused Khartoum of building a pipe to divert 120,000 barrels a day of its oil during transit.
It has also been revealed that Khartoum, with the complicity of foreign oil companies, under-reported oil revenue for years to avoid paying the south its share as stipulated under the 2005 Comprehensive Peace Agreement that ended the north-south civil war.

While shutting down production, Juba discovered in Greater Nile in Unity State that there were 271 oil wells, rather than the 230 claimed by the company operating in the area.

The Sudanese government made no secret of its intention to continue the theft. “The shutdown is [South Sudan’s] decision. But as long as they don't sign, we will continue lifting what we think is our right,” Sudan’s foreign minister Ali Karti told Reuters on January 30.

African Union-mediated negotiations in Addis Ababa have not produced an agreement, but on January 23, Khartoum agreed to release three ships.

Oil accounts for some 98% of South Sudan's income, which began its life with next to no infrastructure, among the worst health and education indicators on the planet and extreme food insecurity.

When Sudan divided, most of the combined oil reserves were south of the border. South Sudan has just signed agreements to build oil pipelines through Kenya and Ethiopia, but until these are constructed the landlocked nation is dependent on using Sudan’s infrastructure to export its oil.

Rampant corruption, poor economic planning and huge military spending by Khartoum meant Sudan’s economy was incapable of dealing with the loss of oil income.

Bloomberg reported on November 23 that South Sudan had agreed, with the backing of the African Union and the International Monetary Fund, to pay $5.4 billion to Khartoum as compensation for lost oil revenue following South Sudan’s independence. However the NCP regime demanded $15 billion.

On February 3, Africa Confidential quoted a “senior Northern oppositionist” as saying the NCP “have convinced themselves that the Independence of the South is just a formality”.

US commentator on Sudan Eric Reeves wrote in a July 30 article published in the Sudan Tribune that Khartoum’s continued provocations and refusal to enter reasonable negotiations over the transport of South Sudan’s oil may indicate that the NCP regime’s real intention is to provide the pretext for militarily seizing South Sudan’s oil fields.

The Sudanese Armed Forces (SAF) have already conducted regular air assaults across the South Sudanese border. Sudanbombing.org said Sudan has bombed South Sudan 29 times since December 2010.

Khartoum also violated agreements on the disputed border region of Abyei (a site of major oil reserves) when the SAF seized control of the area last May, displacing at least 100,000 people.

Khartoum has been laying the groundwork to justify a war with the south, repeatedly insisting that South Sudan is arming and aiding the people of South Kordofan and Blue Nile resisting brutal SAF offensives. It also claims South Sudan has caused the north’s deepening economic crisis.

South Kordofan and Blue Nile lie just north of the border with South Sudan and most locals supported and fought with the south during the civil war.

When the SAF and their militias launched major assaults on both states mid-last year, they were met with fierce resistance led by the SPLM(N), which formed a separate party from its southern counterpart after the south’s secession.

Hundreds of thousands of people have been displaced by the SAF’s onslaught and aid and food have been blocked by Khartoum.

The January 27 Sudan Tribune said Sudan’s second vice-president Al Haj Adam Youssef said it was willing to resume war. He told the Al Sahafah: “If necessary, Juba is not far.” On February 3, Bashir told state television: "We will go to war if we are forced to go to war."

However, the Tribune reported on January 29 that 700 army officers rejected the government’s war cries, noting the inability of the SAF to defeat the people of South Kordofan and Blue Nile, let alone extend the war beyond Sudan’s borders.

The NCP sought to blame Juba for the descent to war. On February 8, the pro-Khartoum Sudan Vision said NCP spokesperson Qutbi Al Mahdi “affirmed that the behavior of the government of South Sudan demonstrates that it is determined to continue walking the road of war with Sudan after it has halted pumping oil and began to stir up many problems”.

The US has held both parties equally responsible for the crisis, failing to condemn Khartoum’s bullying. On January 20, US State Department spokesperson Victoria Nuland urged both countries to “redouble their efforts to reach an agreement on permanent oil and financial arrangements as the impending crisis threatens not only the flow of oil but also long term damage to infrastructure”.

Negotiations resumed on February 10.