Sudan's New Peace: Following the Signing of a Long-Awaited Peace Agreement between the Government and Southern Sudanese Rebels, the Possible Lifting of US Sanctions and Investment by Foreign Oil Companies Looks Increasingly Probable

By Price, Stuart | The Middle East, February 2005 | Go to article overview

Sudan's New Peace: Following the Signing of a Long-Awaited Peace Agreement between the Government and Southern Sudanese Rebels, the Possible Lifting of US Sanctions and Investment by Foreign Oil Companies Looks Increasingly Probable


Price, Stuart, The Middle East


WITH THE PUTTING OF PEN to paper between the Sudanese government and the Sudan People's Liberation Movement/Army (SPLM/A) to a comprehensive peace deal, comes the hope of a new era for Africa's largest country. The 21-year conflict, which has claimed the lives of over two million people through fighting or war-induced famine and disease and displaced a further four million, was finally brought to a close at a lavish signing ceremony in the Kenyan capital, Nairobi, on 9 January.

The internecine conflict of the past two decades has pitted the Muslim government of President Omar Hassan Ahmed Al Bashir against the predominantly Christian and animist southerners led by Dr. John Garang. The fighting has virtually destroyed great swathes of the southern region of Sudan in the continent's longest running civil war. Fighting broke out between the two sides in 1983 when the rebel movement took up arms against the Khartoum regime demanding greater autonomy and a share of wealth.

Another significant factor that has played a pivotal role in the conflict is Sudan's comprehensive oil and gas reserves, much of which is found in the country's southern regions. In spite of substantial production and in particular the export of oil beginning only toward the end of 1999, it now accounts for over 70% of the country's total export revenue. Current production levels stand at 320,000 barrels per day. With much of Sudan's natural resource potential considered as greatly under-explored, the final cessation of hostilities between the two main protagonists in the north/south war should now allow for that potential to be realised. The deal, however, does not encompass the fighting in the Darfur region in the west of the country.

THE OIL DEBATE

At the beginning of 2004, Sudan's proven oil reserves were estimated to be at 563m barrels, more than double the predictions of three years earlier. Recoverable estimates are placed in the region of 800m barrels. Despite these prospective reserves, economic development has been slow in Sudan due to continued fighting and the high-risk nature of investment deterring potential overseas financiers. Moreover, the US placed sanctions against the Khartoum regime in November 1997 as a result of its atrocious human rights record and its sponsorship of international terrorism. The sanctions prohibited trade between the two countries and any investment by American companies or individuals in Sudan.

Petroleum exploration in Sudan began during the 1960s, when the Chevron Oil Company started offshore drilling in the Red Sea. Later that decade and during the 1970s, Chevron discovered several oilfields around towns in the south of the country. However, due to the eruption of fighting between government and rebel forces, it abandoned its operations in the area in 1985. With Chevron's withdrawal, the government split its concession into a number of smaller blocks, with the Canadian firm Arakis Energy obtaining the rights to the operation north of the town of Bentiu in 1993. Three years later, Arakis agreed to join a consortium of the Greater Nile Petroleum Operating Company (GNPOC), comprised of the Chinese National Petroleum Corporation (40%), Petronas of Malaysia (30%), Sudapet (5%) and Arakis (25%), which dominates the country's oilfields.

Of greatest significance in this group is the stake held by the Chinese. Yet the relationship between China and Sudan runs deeper than simply oil provider and oil consumer. Because of the unavoidable links between the extraction of oil and the procurement of arms by the government to fight the southern rebels, the exploitation of the country's natural resources has long been a controversial matter. A vast array of modern weaponry including tanks, warplanes, bomber aircraft, helicopters and small arms that were made in China helped proliferate the war and contribute towards the government's programme against the SPLA.

Human rights organisations have long charged that the Khartoum regime has used the revenue from oil sales to increase its war effort and commit wholesale human rights abuses against civilians living on ancestral lands within the vicinity or near oilfields. …

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