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2
Mar
2012

Heading for War between the Two Sudans?


Since South Sudan seceded from Sudan in July 2011, there have been numerous clashes along their common border. The UN estimates that several hundred thousand people have been displaced by fighting in the border areas of South Kordofan, Blue Nile and Unity State. Both countries accuse each other of backing rebels operating in their territory.

Various mediation efforts to end the conflict in Darfur and to ease tension between Sudan and South Sudan have so far failed. The situation up and down the border seems only to be getting worse.

The failure to resolve a number of issues before South Sudan seceded, including  borders, security and oil, is being paid for now. Above all, the lack of a meaningful solution for the areas of Abyei, South Kordofan and Blue Nile were all too predictable sources of conflict.

The Disputed Territory of Abyei

The status of the disputed territory of Abyei remains unresolved, though it has been in the hands of the Sudanese Armed Forces since May 2011.  Indeed, Abyei has not held a referendum on whether to join north or south, which was due before the split. Neither have Blue Nile and South Kordofan had popular consultations about their future, which were also due before the split.

The Abyei region is often described as “oil-rich,” but after the 2009 Permanent Court of Arbitration ruling in The Hague, most of the oil fields now fall outside Abyei’s borders. It still produces oil, but the real issue here is more ethnic than economic.

Abyei is claimed by a southern group, the Dinka Ngok, as well as northern nomads, the Misseriya. The Misseriya spend part of each year grazing their cows in the area as part of a great trek into greener pastures that takes them deep into South Sudan.

There are several prominent Dinka Ngok in both the Sudan People’s Liberation Army, which fought for the south’s independence, and in SPLM, its political wing. After serious fighting in Abyei three years ago, the separate armies withdrew and agreed to joint patrols. Armed groups of Misseriya were often used as a proxy army by Khartoum during the civil war. The north fears alienating the Misseriya, who also live in the combustible neighboring state of Southern Kordofan. So both Khartoum and Juba have strong reasons to care about a seemingly insignificant patch of land.

Tensions in Abyei grew once a referendum scheduled for January on whether to join the north or the south did not take place. There was no agreement on whether the nomadic Misseriya were eligible to vote.

Sharing Oil Revenues

Oil is the lifeline of both Sudan economies, and the South’s secession left Khartoum with output of about 125,000 barrels per day and South Sudan with production that has fallen slightly to 350,000 bpd from 375,000 bpd in June. Oil revenue is about 98 percent of South Sudan’s income, and is vital if the government is to develop a country devastated by years of civil war that is one of the world’s poorest nations. China is the biggest buyer of oil from the two countries, taking some 12.99 million barrels last year – five percent of China’s overall 2011 crude imports. China is also the biggest investor in South Sudan’s oilfields.

Exact Border Demarcation

People fleeing the fighting in those states have crossed the border to the south, and it appears the areas where they have gathered were bombed. It is estimated there are 800,000 to one million South Sudanese in Sudan. Since last autumn a further 300,000 have already made their way to South Sudan. Khartoum believes northern rebels have crossed into South Sudan to rest and recuperate before rejoining the fray. Whatever the truth, there is no doubt that these repeated incidents have further undermined Sudan and South Sudan’s already fragile relationship. The UN and the U.S. have both already condemned Sudan, and the flurry of denials from Sudanese officials suggest they must have at least some concerns about the damage the accusations are doing to their country’s standing. President Kiir has made it clear he will not let South Sudan return to war. But the increased tension cannot help the ongoing negotiations on post-secession matters, and the situation could potentially degenerate further.

By the end of January 2012, the two Sudans made a further step towards confrontation: The row heated up when Sudan said it was confiscating some of South Sudan’s oil exports to make up for what it called unpaid fees. Landlocked South Sudan has to use a northern pipeline and Port Sudan to export its crude, and the two countries are in dispute over the transit fees it should pay.

The seized crude was loaded onto three tankers between January 13 and 20, 2011, South Sudan’s justice ministry stated. Sudan sold one of those cargoes, a 600,000-barrel shipment loaded on the vessel Ratna Shradha, to a North Asian trader. The final price of the sale was unclear, but one trader said that the cargo was sold at a discount as steep as $14 a barrel. That would indicate an $8.4 million discount for the whole cargo versus the last official price charged by the South. In addition to the three, at least seven tankers are still waiting at the port to carry December and January cargoes, racking up demurrage costs of $20,000-$22,000 per day, traders and shipbrokers estimated. Buyers reportedly include PetroChina, Glencore, Vitol, Trafigura and Arcadia.

Sudan is demanding $1 billion for unpaid transit fees since July 2011, plus $36 a barrel in the future as a transit fee, roughly a third of the export value of southern oil. Khartoum also wants Juba to share Sudan’s external debt of $38 billion.

South Sudan President Salva Kiir accused Khartoum of “looting” oil worth roughly $815 million and of building a tie-in pipeline to divert 120,000 barrels per day of southern oil flowing through the north. South Sudan retaliated by saying it would shut down its crude output, last estimated by officials at 350,000 bpd in November 2011. The main operator Petrodar was expected to close the key blocks 3 and 7. Petrodar is a consortium comprised mainly of Chinese firms: China National Petroleum Co. (CNPC), Sinopec and the Malaysian firm Petronas. Analysts estimate its total oil output from South Sudan at 250,000 bpd.

“We have shut down almost 250 (wells). Remaining are 390 oil wells. The program is expected to finish in three more days. Maybe on 30 or 31 of January all oil wells in Ada, Gumri, Moleta and Palouge will be shut down,” Hago Bakheed Mahmoud, field operation manager for Petrodar, told reporters at the Palouge oil fields.

Mahmoud said current output was still between 145,000 and 150,000 barrels a day, adding that the company could resume production within three to four days. Blocks 3 and 7 provide much of South Sudan’s output.

Opening an Alternative Oil Route

South Sudan has been busy building an alternative route for its oil. Dhieu Dau, the South Sudan Oil Minister, said the government wanted to push ahead with plans to build an alternative pipeline to end dependency on northern export facilities. “We are planning that building an alternative pipeline will be a national duty for all South Sudanese and the plans are now being designed by the Ministry of Petroleum and Mining,” he told reporters. South Sudan has held talks with foreign firms to build a pipeline to Kenya, but oil industry insiders are skeptical since it would have to cross through rough and violent terrain.

In addition, oil production is going to be halved within a decade without significant new finds, according to the International Monetary Fund (IMF). South Sudan hopes to find oil in Jonglei state where France’s Total holds a largely unexplored oil license, but tribal violence has escalated there in past weeks.

Sudanese President Omar al-Bashir and South Sudan’s President Salva Kiir met recently on the sidelines of a meeting of East African officials in Ethiopia, but failed to resolve their differences over the oil transit tariff. Nevertheless, Sudan declared its readiness to free tankers carrying cargoes of South Sudanese crude it had seized earlier this month, in a push to defuse a row over transit fees between former civil war foes that both depend on oil for almost all their income.

With no solution on the horizon, Sudan’s President al-Bashir raised the tone on February 3. Asked in an interview with state television whether war could break out with South Sudan, Bashir said: “There is a possibility.” He said Sudan wanted peace, but added: “We will go to war if we are forced to go to war.” “If there will be war after the loss of oil it will be a war of attrition. But it will be a war of attrition hitting them before us,” he said.

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Col. (ret.) Dr. Jacques Neriah, a special analyst for the Middle East at the Jerusalem Center for Public Affairs, was formerly Foreign Policy Advisor to Prime Minister Yitzhak Rabin and Deputy Head for Assessment of Israeli Military Intelligence.

About Col. (ret.) Dr. Jacques Neriah

Col. (ret.) Dr. Jacques Neriah, a special analyst for the Middle East at the Jerusalem Center for Public Affairs, was formerly Foreign Policy Advisor to Prime Minister Yitzhak Rabin and Deputy Head for Assessment of Israeli Military Intelligence.
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