The relation between Sudan and South Sudan will continue its ups and downs for the foreseeable future, with oil constituting the core of this relationship.
Over the past few days, oil issues between the two countries crept back to news screens as the first shipment of South Sudan oil is set to be exported through Sudan’s terminal after 17 months absence due to Juba’s decision to shut down its oil production early last year. If all goes according to plan, next Wednesday one million barrels of Dar blend should be completely loaded.
Also last week and during a meeting between the heads of Uganda, Kenya and Rwanda, the three agreed to put hands together and join a pipeline ending in Kenya’s port of Lamu to provide an outlet to the landlocked countries of Uganda and South Sudan.
Earlier in the month, Sudan’s President Omar Al-Bashir put in practice his threat to South Sudan two weeks earlier to stop its support to the rebel movement of Sudan Revolutionary Front. Otherwise, Sudan threatened, it will not allow the flow of South Sudan oil through its territory. Later, Sudanese officials clarified the decision would take effect after 60 days stipulated in the agreement.
Khartoum’s decision was criticized by US Ambassador to the UN Susan Rice, who said that the 60 days’ notice was intended for technical and economic reasons.
That is correct, but the main cooperation agreements that provided the umbrella for the eight agreements between the two countries signed last September pointed out clearly to the two issues of the right of each country to exercise its sovereignty on oil installations in its territory and that all the agreements, including the one on security, which is Sudan’s main worry, are to be implemented fully and completely.
As for the issue of an alternative pipeline, it was noticed that the meeting hosted by officials of Uganda and their colleagues from Kenya and Rwanda did not include their fellow counterpart from South Sudan Slava Kiir.
However, the alternative pipeline idea has been mooted for quite a long time.
Following the shutdown of oil production, following a row on transit fees, Juba went ahead and signed memorandums of understanding (MOUs) with Kenya, Ethiopia and Djibouti to build an alternative pipeline and free itself from “pressures” from Khartoum.
But despite the importance of the issue, the fact is 17 months have already passed and nothing concrete has been done so far. Much need to be worked out to turn the MOUs into detailed feasibility studies that cover a host of issues like the reasonable route to take for compensations for the land that will be used to construct the pipeline and — more important — the finance.
Such detailed study is estimated to take up to five years as they research the topography where some parts are as high as 2,000 meters above sea level, or swampy areas, forest and — more important — the local communities, where many own the land, deals have to be concluded with them otherwise there is a risk for potential violence.
Moreover, the issue of financing the pipeline brings quickly how it is going to be handled.
The general practice is that pipelines are financed by companies benefiting from it, which takes the question back as to how much reserve is left of the discovered oil.
Oil has been pumped out from the three producing areas in South Sudan for more than eight years and some fields have shown maturity and as such declined in production. Little has been done to explore more or enhance production rates to increase quantities.
Besides, the potentially rich oil state of Jongeli is suffering from insecurity and as a result the consortium of foreign companies led by the French giant Total failed to dig even one well over the past seven years since it resumed operations and that is mainly due to security concerns.
South Sudan needs in fact at least two pipelines as its producing areas are far apart. Besides, the one proposed to go through Ethiopia and end up in Djibouti looks more credible as it connects the producing area with more volume of some 200,000 barrels per day, but such proposed pipeline route suffers from the problem of passing through the two countries of Ethiopia, which in itself is landlocked, and Djibouti. Transiting oil through one country only is potentially problematic. Passing through two countries simply adds to that worry.
It was a geological fact that the bulk of known oil reserves are in South Sudan, while downstream facilities are well established in Sudan. That is a geographical fact too and provides the realistic approach to take South Sudan oil to world markets.
Oil has played a significant role in fueling the civil war in old Sudan; it also helped in pushing for peace and later separation of South Sudan. And it stands the best chance of pushing the two countries to base their relationship on mutual interest.
