Oil Struggles and Pipeline Threats in the Sudans

This post is partly an excuse for me to promote Luke Patey’s excellent essay “Pipe-dreaming in South Sudan,” but first a little context, and a few additions in light of news from yesterday.

South Sudan officially attained independence from Sudan last July, but the two countries’ economic interdependence remains in effect. In particular, the oil-rich South still relies on the pipeline running through (North) Sudan to get its oil to port. The last eight months have seen stalemate over issues that were supposed to find resolution at independence, especially oil transit fees.

In late January, South Sudan moved to shut down its oil production, accusing the North of stealing its oil. The North has apparently “already sold at least one cargo of crude oil seized from South Sudan at a discount of millions of dollars, and is offering more.”

The oil shutdown, meant to pressure the North, poses a number of problems for South Sudan itself: a negative impact on local businesses, a shortage of dollar reserves, inflation, difficulty paying government salaries and administrative costs, etc. These problems could in turn provoke social unrest. Coming amid violence in different parts of the new country, such difficulties spell real trouble for the government in Juba.

In addition to the shutdown, Juba is looking into more long-term solutions for its problematic dependence on North Sudan. Namely, alternative pipeline routes. In late January, South Sudan signed a pipeline deal with Kenya, and yesterday South Sudan signed a deal for a pipeline that would run through Ethiopia to Djibouti.

A new pipeline would certainly pose an economic threat to Khartoum, but talk of pipelines will be difficult to translate into reality. As Patey explains, politics and regional trends (especially South Sudanese frustration with the North and Kenyan ambitions for its port at Lamu) work in favor of the alternative pipeline plans, but economics work against them. The proposed Kenyan pipeline would be over 400 kilometers longer than the existing pipeline, and would cross rough terrain, both political and topographically. Additionally, the cost of a new pipeline might not make sense given current projections that South Sudanese production will decline in the coming years. Patey concludes, “the longer it takes to foster stable relations over oil, the more likely the people of South Sudan will one day hit the streets in celebration of a new pipeline,” but suggests that that day still lies far off.

Logistical difficulties also dog the proposed Ethiopia/Djibouti pipeline, though it would be shorter than both the existing pipeline and the Kenyan one:

Industry experts have said that building a pipeline could take three years or more and be extremely costly…Djibouti, on the Gulf of Aden at entrance to the Red Sea, lies at least a thousand kilometres from South Sudan’s oil fields, and crosses remote areas rife with rebel forces.

Rumor says pipeline construction could begin as soon as six months from now, but the consensus from analysts seems to be that completion lies a long ways off (I’ve read three years, at minimum), and that South Sudan will want – nay, need – a settlement with North Sudan sooner than that. There will be no easy way out for either party to the conflict, it seems.

Africa News Roundup: Senegal Riots, Sahel Hunger, Ethiopia and Somalia, Sudan Oil, and More

Senegal’s constitutional court decided today (unsurprisingly but not uncontroversially) that incumbent President Abdoulaye Wade can seek a third term in the country’s February 26 elections. The announcement provoked riots in Dakar. The court also “ruled that [Senegalese singer] Youssou N’Dour’s candidacy was invalid because he had not gathered the required number of signatures.”

Humanitarian agencies are warning of a mass food crisis in the Sahel. Several factors are causing the crisis, the LA Times writes:

A recent survey by UNICEF forecast 1 million cases of severe malnutrition, with between 25% and 60% of those people likely to die without emergency assistance. The agency has plans to feed 1 million people in the Sahel — most of them in the hardest-hit country, Niger — but so far has raised funds to feed only half of them.

The failure of rains triggered a rise in food prices, so families in crisis cannot afford to buy. Meanwhile the fragile agricultural system, stressed by overgrazing, struggles to feed the rapidly growing populations in a region that has some of the highest birthrates on Earth.

Thousands of migrant workers who fled Libya and returned home because of persecution after last year’s revolution in the North African nation have added to the pressure as families struggle to survive without the money that workers had sent home. Locust plagues in some areas complicated the crisis further.

Ethiopia’s Prime Minister Meles Zenawi held a press conference yesterday where he addressed the issue of his country’s military presence in neighboring Somalia:

Meles Zenawi said Friday he would pull troops out of Somalia “as soon as feasible,” admitting for the first time that forces had crossed into the war-torn neighbouring country.

“The decision has all along been to help the TFG and we will withdraw our troops as soon as feasible,” Meles told reporters in the Ethiopian capital, referring to Somalia’s transitional government.

“We are not going to create a vacuum, we expect the AMISOM troops to be able to fill in the gaps before we withdraw,” he added.

Columns of Ethiopian soldiers rolled into Somalia in November to fight al-Qaeda linked Islamist rebels, but Addis Ababa had previously denied their presence.

Sudan and South Sudan continue to disagree over oil transit fees. South Sudan has shut down oil production in protest at alleged Sudanese theft.

The AFP covers a new United Nations report that assesses the post-Qadhafi Sahelian security environment. The report casts Nigeria’s Boko Haram as a growing regional threat. Read a summary of a Security Council briefing on the report here.

 

North and South Sudan Take a Step Toward (Some) Peace

This weekend Southern Sudanese President Salva Kiir met with his counterpart, President Omar al Bashir of Sudan, in Khartoum. Although the problems between the two Sudans are far from over, this visit hopefully marks a step toward a resolution of major issues. This resolution may be flawed, but hopefully it will be one that both sides can live with.

The two largest issues dividing the two sides are how to share revenues from oil and how to demarcate the border. The border issue is especially complex: a number of areas are disputed, most famously the territory of Abyei, whose referendum on whether to join the North or the South has been indefinitely postponed (currently it lies within the North). Although coming up with a formula for oil sharing and resolving Abyei’s status might be enough to conclude the major disputes between the two sides, the question of the border areas is also significant because of the violence going on in several Northern states that lie on the new border. Blue Nile and Southern Kordofan States are home to thousands of people who fought for or sympathize with the Sudan People’s Liberation Movement (SPLM), the governing party in the South. Even though such areas are not part of the new South Sudan, Southern leaders are keen to see violence end there. So long as it continues there will be serious tensions between South Sudan and Sudan.

Sudan Tribune provides details of the framework agreed upon in Khartoum:

Sudan and South Sudan have setup five task-forces to trash out issues of economy and border security among others…

The five committees include bilateral relations, economy, higher education, humanitarian affairs and border security.

Sudan’s minister of finance and national economy, Ali Mahmud, said that the two sides had agreed on five points in the fields of economic cooperation and banking exchange as well as on establishing a joint administration to manage oil facilities and promoting cross-border trade.

VOA and AFP have more.

The next step will be a meeting in Juba on October 18, which is quite soon.

There are reasons for pessimism – talks could fall through, issues could remain intractable, implementation could falter, and violence in the border regions could worsen, bringing tensions to new highs – but the personal involvement of Bashir and Kiir, combined with the genesis of this new framework, suggests that the two sides are serious about reaching a solution. As I said above, I do not think all the disputes will be ironed out, and some level of violence in the border areas may continue to keep relations problematic, but if resolution on revenues-sharing and Abyei comes, the two countries will be able to move forward.

Regarding Abyei, I think (North Sudan) will likely hold onto it. Their de facto control of the area gives them a huge advantage, though they may have to give Juba some big concessions to keep it.

Sudan Heads Toward Split with Final Status Issues Unresolved

Reuters:

Leaders of north and south Sudan agreed on Monday to continue talks on a series of disputes after the south’s impending secession, officials said, a move that will disappoint Western countries hoping for a quick deal.

Sudan’s oil-producing south is due to declare independence on Saturday — a split that was voted for in a referendum promised in a 2005 north/south peace deal.

The north and south, which fought each other during decades of civil war, have yet to agree on the position of their shared border and how they will manage oil revenues.

South Sudan’s independence is a big deal, and it will change things for Sudan and for the region. But North-South interdependence will not end on July 9. For at least the medium term, economic linkages and security issues will involve each country deeply in the other’s affairs. With most of the oil in the South, but the pipeline, ports, and refinery facilities in the North, the two countries will need to work together to make a profit. And with many former Southern fighters or sympathizers still in the North, the border issues unresolved, and violence ongoing, the security questions also loom large. Negotiations over these issues will clearly take at least some time, and the underlying interdependence will remain in place until and unless something dramatic happens, like the construction of a new pipeline from South Sudan through Kenya or Ethiopia.

AFP reports on Southerners who are returning home:

Reports Roundup: Nigeria, South Sudan, Counterterrorism, Africa and Oil

A few recent reports and publications that readers may find useful:

  • Africa Center for Strategic Studies: “Nigeria’s Pernicious Drivers of Ethno-Religious Conflict.” On causes of and potential solutions for the recurring violence in Jos.
  • Human Rights Watch: “South Sudan: A Human Rights Agenda.”
  • The White House: “National Strategy for Counterterrorism, June 2011.” Discusses al Shabab on page 14, and al Qaeda in the Islamic Maghreb (AQIM) on page 16.
  • The World Bank: “Is Africa More Vulnerable to Oil Price Increases?”

If you read any of these publications, stop back and tell us your impressions.

Saturday Links: Radio in Somalia, Habré Trial, Southern Sudan, Mauritanian Education

VOA, one of my favorite sources for news on Africa, has been having a tough time in the Horn lately. First Ethiopia threatened to jam some of VOA’s broadcasts, and now al Shabab is banning VOA and the BBC in southern Somalia. Somalis will still have Radio Mogadishu though.

Speaking of Somalia, fewer refugees are heading to Yemen now in comparison with last year.

And speaking of Ethiopia:

A rebel group in Ethiopia’s southeastern Somali region has agreed to lay down arms after decades of guerrilla war, Communications Minister Bereket Simon announced Friday.

Leaders of the United Western Somali Liberation Front (UWSLF) had, after talks with the government, “accepted totally to abide by the constitution of Ethiopia and operate legally and abandon the armed struggle,” Bereket told a press conference.

[...]

Created in the 1970s, the UWSLF was active during the 1977-78 war for control of the Ogaden, in which Ethiopia defeated Somalia. But the rebel movement has seen many divisions and became increasingly inactive.

From what I understand the more powerful Ogaden National Liberation Front will continue fighting the Ethiopian government.

Senegal needs $38 million in assistance in order to try former Chadian President Hissène Habré “for crimes against humanity.” I hope they get the funding (more background here).

Three pieces on Southern Sudan: The Guardian has a photo essay on ethnic violence there, Reuters looks at oil troubles, and Reuters AlertNet rounds up expert views on the future of the region after Sunday’s elections.

Students for and against “Arabization” of education protest in Mauritania. And Arab nationalists in Mauritania “announced the setting up of an umbrella group whose ideological reference is the Libyan leader, Mouamar Kadhafi.”

In the Niger Delta, ex-militants debate a return to violence.

What news are you following today?

Goodluck Jonathan Shakes Up Nigeria’s Oil Sector

Acting Nigerian President Goodluck Jonathan has drawn attention for shaking up the cabinet, replacing powerful ministers chosen by ailing President Umaru Yar’Adua with his own picks, and tasking the cabinet with a far-ranging agenda designed to address Nigeria’s problems.

Bayelsa State, Nigeria

But the BBC says Jonathan’s boldest moves are taking place in the oil sector:

Nigeria’s Acting President Goodluck Jonathan has sacked the head of the national oil company Mohammed Barkindo.

He will be replaced by Shehu Ladan, who was himself dismissed from the state-run NNPC by President Umaru Yar’Adua before he fell ill last November.

The BBC’s Caroline Duffield in Abuja says the move will be seen as evidence of Mr Jonathan’s determination to remould Nigeria’s political landscape…news of Mr Barkindo’s sacking from the inefficient Nigerian National Petroleum Corporation (NNPC) took the country by surprise and will be read as an aggressively political act.

Jonathan is making some pretty major changes.