Oil Exploitation As A Factor Of Conflict Between Sudan And South Sudan - Research Paper Example

Oil And Gas In Sudan And South Sudan According to a survey done by BP Statistical Energy in 2008, Sudan had proclaimed oil reserves of about 6.614 billion barrels by the end of 2007 (Ascha, & Bazilian 2). This is equal to the 0.53% of the world’s oil reserves. This is clear indication of a land that has the precious mineral and is armed with the potentials of being among the leading oil producers not only in Africa but all over the world if all factors are held constant. The unified Sudan was located in the Eastern part of Africa. It borders Ethiopia, Kenya, and Egypt. It is one of the largest countries in Africa. Initially, Sudan was one nation, but political development has led its partitioning into the Sudan and the South Sudan (Sidahmed 21). These two nations are completely sovereign and are compelled to manage their resources independently like the oil and the natural gas (Ottaway & Mai 99). This paper will study the economic and political influences that are related to oil and natural gas in both Sudan and South Sudan. Sudan and South were declared independent countries in July 2011 after a referendum that was conducted in the South Sudan where the civilians voted for independence overwhelmingly (Sidahmed 11). According to Ascha, & Bazilian (6), before the split, the once unified Sudan was second largest producer of oil in Africa as at 2010. Since the splitting of the two nations, the oil and natural gas productions have reduced. This is attributed to the rampant disagreement over the sharing of oil reserves and the armed conflict that has dominantly curtailed the country for several years. So far the Sudanese explorations of their oil and natural gas reserves have been anchored to the central and southern parts of the country (Ascha, & Bazilian 6). The upstream oil industry is believed to have the potential of being the economic hub or the heartbeat of the economy of the Eastern African nation. Even though both North and South Sudan are deemed to be widely unexplored; they have stood out to be major producers of oil and the natural gas for several years as at now (Ascha, & Bazilian 6). They boast of vast oil and gas reserves. The downstream industry of oil in the republic of Sudan is very vital sector in the economy. Before the division of Sudan into two nations, the country had three major oil refineries and was involved significantly in the importation of both the crude oil and the refined products. The completion of other new refineries have rendered South and North Sudan predominantly self-sufficient and have the ability to export both refined and crude oil products to the neighboring countries like Egypt, Kenya and the rest of the continent. In both states, the oil industries are controlled and guided by their respective ministries of energy and mining. Other ministries like Ministry of Planning and that of finance are also major stakeholders in the energy sector. The representatives are the members of Board of Petroleum that is considered responsible for each final approval of contracts that are related to the petroleum industry (Ascha, & Bazilian 6). In North Sudan, however, the daily control of the industry of oil is done by a body called Exploration and Production Authority. Consumption of Petroleum Products Petroleum products and natural gas produced by the two nations are responsible for each and every commercial energy utility. The sectors of transport and industries are the primary consumers of residual fuels and gasoline. By the year 1997, as per the US Department of Energy, the use of both oil and natural gas from Northern and Southern Sudan was of about 1.3 million metric tons. Today, the use of oil in Sudan and South Sudan has increased by a yearly average of 10%. This is between 2000 and 2011 (Hamilton 22). It attained its highest level of about 132, 000 bbl/d by 2011. Most of this oil was consumed in Sudan. Industrialization has been attributed to the immense increase in fuel consumption (IMF). Other promoters of this increase are the growth in car ownership and access to electricity. However, by 2012, the consumption of oil had reduced to 95,000 bbl/d, this is almost 30% from the figures that were registered in 2011 (Patey 634). This drop is believed to have been caused by the elimination of export transit fee after South Sudanese oil production had been temporarily shut down. The consumption was thus stagnant in 2013 due to the numerous conflicts in South Sudan. The oil demand is met through the domestically crude oil that is refined. This is along the imported and the refined products (Ottaway & Mai 107). The diesel used for the generation of electricity and transport accounts for the highest consumption rate. This is closely followed by gasoline that is also used for transport and the fuel oil for power according to the IMF. The two nations also import diesel, jet oil for aviation and the LPG in order to supplement the existing domestic supply. The Civil War and the Discovery of Oil It is true that both North and South Sudan have vast reserves of oil that remain unexplored and dormant (Harneit-Sievers 33). One of the key factors that have promoted this is the prolonged civil war in the two nations. This part of the paper will give detailed information of the civil war and how it has affected the oil and gas industry in South and North Sudan. Sudan has been affected by the civil war for almost as long as they have been independent. Sudan attained self-determination from the British in 1956 (Patey 650). However, the civil war had begun by 1955. The Second Civil War in Sudan started in 1983 and historians believe that this war was the most vicious. It was severely brutal and resulted to over two million deaths. Civilians of about four million were displaced (Grawert, & Andrä 11). Sudan, which is mostly described to be the microcosm of the continent of Africa, is divided majorly by Arabs and Muslim in the North while blacks, Christians and the animist settle in the South of the country. The Southern part is ethnically vast and has many linguistic groups. The antecedent of the civil war is traced back to the renowned “Southern Policy” which had been established by the imperialists, the British, during the colonial era after the end of the World War I (Patey 634). The policy proscribed the tutoring of Arabic and the Islamic faith in the Southern territory. Instead, the British advocated for English and the conversion of the indigenous people to Christianity (Hamilton 23). The policy aimed at curtailing the influence from the North and it consequently elicited isolation and created socio-political and economic marginalization. When the nation attained her independence from the Great Britain, the country was already rooted in resistance. By 1958, the rebellion intensified when General Abboud seized authority and embarked on compelling the spread of Islam in the South. Historians state that by 1963, the war had become a fully fledged civil war. A coup followed and General Nimeiri became the leader of Sudan. He held the Addis Ababa Agreement in 1972 which led to the end of the 15 years of civil war. The agreement lasted for 11 years until pressure to exert control in the South led to his regime dictatorial and based on Islamism. The situation in Sudan was heightened and worsened by the oil discoveries in the Southern Provinces (presently South Sudan) in the 1970’s (Hamilton 62). This development is said to have eventually changed the balance of power in the whole country and elaborated a dominant motive of the existing conflict. Chevron Oil Company was granted the concession in 1975 and by 1977; they had started drilling (Harneit-Sievers 56). They were able to discover more significant oil reserves in the South in 1980’s. Peace and stability in the country deteriorated quickly into what was more brutal war. In 1980, General Nimeiri tried to redraw the border marks of Upper Nile Province in order to include areas that had been discovered to have oil (Grawert, & Andrä p 45). By 1983, he gave orders that abrogated the agreement of Addis Ababa and took back power to the central government so as to get rid of the Southern autonomy and divided it into three different regions (Patey 634). He made Sudan completely Islamic and declared that Sharia law would apply in Sudan (Hamilton 63). The South Sudanese merged to form Sudan People’s Liberation Army, commonly referred to as SPLA, in order to rebel. The war now resumed with all fury. The civil war in Sudan was prompted by the several factors. They included the British Southern Policy that created marginalization, religious conflict between the Norths Islamic people and the Christians and traditionalists in the South and most importantly, the discovery of oil reserves in the Southern Territories. Impacts of the Civil War on Oil Exploration The civil war in Sudan created a lot of instability in the nation. By 1975, Chevron had been granted the concession rights to explore oil. It is not a mere coincidence that they begun drilling in 1977. This was because of the frequent wars that scared away investors (Patey 635). Investors were unable to put down their tools at work fearing for their lives and destruction of the refineries. Discovery of oil in the South being a catalyst of the civil war slowed down the pace of the exploration (Grawert, & Andrä 45). By early 1980’s, new and larger oil reserves were being discovered in the Southern territories. This development dissatisfied the Northerners. They were thus prompted by greed to try and grab lands with oil from the South as in the Upper Nile Province. This led to a lot of border disputes and consequently, the foreign investors like Chevron had to halt their work for the disputes to be redressed. Even after the seceding of South Sudan from the North, both countries still lag behind in the exploration of the vast oil reserves that they have (Hamilton 22). They are not producing much of the oil mainly because of lack of enough technocrats. Sudan has been in war for a very long time. All these while, there were no meaningful educational institutions being set because the civilians were pre-occupied with the civil war (Harneit-Sievers 56). Inadequate education, therefore, signifies that they have not been able to produce enough expertise of their own to help in the exploration of the oil and the natural gas. South Sudan is the most affected and ever since her independence from Sudan, she has continually borrowed personnel from Kenya, Uganda, North Sudan and Egypt and from the West to aid her in restricting her oil industries. The massive loss of lives and destruction of property during the war has slowed down the progress of the Oil industries. A lot of oil refining industries were torched and destroyed during the conflict between the North and the South. Besides, the great number of lives that succumbed in the war has reduced the domestic market and the workforce in both and South Sudan. The Foreign Influence in the South and North Sudanese Oil and Natural Gas In November, 9, 1999, the United State Secretary of State, Madeleine Albright condemned the administration of Sudan in the UN Summit (Sidahmed 42). The US accused Sudan of abuse of human rights, and a diplomatic sanction was imposed on the government of Sudan in Khartoum-based on its involvement in terrorism. The Unites States rift with Sudan is traced as early as 1993 when the nation was listed in the terrorist sympathizing states (Sidahmed 42). The Anti-terrorism act was signed by President Bill Clinton, and it involved America’s financial penalty on Sudan. More sanctions followed, and all Sudanese assets in America were frozen (Hamilton 77). Clinton pointed out on the Sudanese significant involvement in terror. These sanctions were able to cripple the efforts of Arakis in generating funds in the American markets and it also reduced the chances of Talisman Oil Company to bid for the company since The US firms had been barred from operating in Sudan (Hamilton 78). The US was so intrigued in the oils of Sudan such it blamed Talisman for orchestrating the conflicts in Sudan (Sidahmed 43). She considered South Sudan a hub for terrorism. In 1999, Albright met the Sudanese rebels in Nairobi, Kenya, and promised to sue Talisman to the government of Canada. This she did thereafter and urged the Canadian State through the Canadian foreign minister to compel Talisman out of Sudan. The foreign affairs minister, Mr. Axworthy, replied with opposition and accused the US of interfering with the affairs of Canada (Sidahmed 40). Later, he would order studies to be carried out about Talisman involvement in the civil war. He threatened sanctions in case the investigations proved that oil money was being used to perpetuate the civil war and the gross abuse of human rights (Sidahmed 45). The Harker Report revealed that the civil war in Sudan that oil was a key factor nad stopping the war as the extraction of oil continue was impossible. State of Oil Production after the Split The unified republic of Sudan was already producing oil as from1990 (Grawert, & Andrä 12). Surprisingly, most of the oil reserves are close to or tend to extend to the de facto boundary that exists between Sudan and South Sudan (Sidahmed 82). The independence of Sudan meant that they seized control of almost three-quarters of the oil production as from July 2011, even though production split appears to have changed since the reoccurring of the production is above South Sudan. The autonomy of South Sudan and the loss of production of Sudan appeared to have dealt a heavy blow on the economy of Sudan (Harneit-Sievers 13). It is calculated that Sudan registered a 55% loss in her fiscal revenue and about two-thirds of her foreign exchange (IMF). The Sudanese revenue from crude oil fell from about $11 billion as at 2010 to just below $1.8 billion by 2012. Oil and natural gas still have vital roles to play in the economy of the two nations, albeit to a reduced extent in the Sudan (Harneit-Sievers 56). According to a survey conducted by International Monetary Fund, the revenue from oil was worth about 27% of the total revenue of the government of Sudan by 2012. This also includes the grants. This is different from the 60% which was registered in 2010. After the independence of South Sudan, oil and natural gas counted for about 98% of the revenue that is generated by the government of South Sudan. However, the share appears to be unclear because there are frequent disruptions in the oil production of the country. The sectors of oil in Sudan and South Sudan are apparently linked (Hamilton 29). Since South Sudan is landlocked, it remains relying on Sudan for transportation of its oil through the already established pipelines in Sudan especially to Bashayer Port in the shores of the Red Sea (Harneit-Sievers 53). Sudan depends and benefits a lot from the fees it charges on South Sudan for using of their pipelines and related facilities in order to fill the gap of finance in Sudan and counter for the oil export revenue loss. Oil Production in South Sudan and the Frequent Disruptions On 12th March, 2013, South Sudan and Sudan came up with implementation matrix that has a timeline of carrying out activities within the cooperation agreements (Grawert, & Andrä 33). Notably, the implementation designated dates for the dematerialization of the buffer zone found along the borders that they share and then restart its production. South Sudan thus resumed the limited oil production by April 6, 2013. The first production came from Thar Jath Field. A month later, production from Upper Nile state (the largest field) began. The road to restoration appears very bumpy and rocky to South Sudan. The oil production of the country is also yet to recover fully (Hamilton 13). In May, 2013, she was compelled to partially close productions for several days in Block 3 after Sudan had turned off the pumping stations citing technical problems. However, South Sudan has a conviction that the decision was motivated by politics. In June 2013, the government of Sudan threatened to cut down the access of South Sudan to its two major exporting pipelines after it had accused the government of South Sudan of conspiring with and supporting the rebels that fight the government of Sudan (Harneit-Sievers 56). This allegation has been vehemently denied by Sudan. The production of oil in South Sudan was thus reduced until September, 2013. This was after Sudan announced that she would continue exporting the oil through the two pipelines. Towards late December in 2013, armed conflict began between the forces that are loyal to the head of state of South Sudan, Salvar Kiir, and Riek Machar, who is a former vice president. This conflict led to the fleeing of foreign workers and expertise (Grawert, & Andrä 45). There was also the close down of oil production fields within the unity state. Satellites images that were captured by USA depict vividly how major infrastructures of oil were massively damaged (Hamilton 23). These include oil storage tanks in South Sudan and the manifolds (Harneit-Sievers 56). Production of oil in the Upper Nile was also reduced due to the violence. Oil and gas remain to be the hub of the economies of Sudan and South Sudan. Throughout history, the two precious minerals have left landmarks in the two nations (Hamilton 23). Lives have been lost due to civil war because of oil and the gas. The unified Sudan has been split into two countries. Political and economic aggression exists between them. Even as foreign countries see a business prospect because of the existence of the oil and the gas, caution should be looked into so that Sudan and South Sudan remains peaceful. Work Cited Grawert, Elke, and Christine Andrä. "Oil Investment and Conflict in Upper Nile State, South Sudan, BICC Brief 48." Bonn: Bonn International Center for Conversion (2013). Hamilton, Anne. "Oil Exploitation as a Factor of Violent Conflict Between Sudan and South Sudan." (2012). Harneit-Sievers, Axel. "Oil in Sudan: fuelling conflict–fuelling development." HEINRICH BÖLL STIFTUNG. Sudan: No easy ways ahead. Publication Series on Democracy 18 (2010). Ottaway, Marina, and Mai El-Sadany. Sudan: From Conflict to Conflict. Carnegie Endowment for International Peace, 2012. Patey, Luke A. "Crude days ahead? OIL and the resource curse in Sudan." African Affairs 109.437 (2010): 617-636. Pedersen, Ascha, and Morgan Bazilian. "Considering the impact of oil politics on nation building in the Republic of South Sudan." The Extractive Industries and Society (2014). Sidahmed, Alsir. "Oil and Politics in Sudan." Sudan Divided: Continuing Conflict in a Contested State (2013): 103. Read More