Sudan Plebiscite May Shift Control of Crude Oil Pumped by China National
Sudan Vote May Shift Control of Oil
Trevor Snapp/Bloomberg
A vote for independence will give the south control of about 80 percent of Sudan’s current oil production of 490,000 barrel a day.
A vote for independence will give the south control of about 80 percent of Sudan’s current oil production of 490,000 barrel a day. Photographer: Trevor Snapp/Bloomberg
Jan. 7 (Bloomberg) -- Bloomberg's Nicole Itano reports on the referendum in Southern Sudan on Jan. 9 and the possible impact of a north-south split on the share of the country's oil resources. A vote for independence will give the south control of about 80 percent of Sudan’s current oil production of 490,000 barrels a day. (Source: Bloomberg)
In Southern Sudan, the open palm symbol of secession is splattered across billboards and T-shirts as the region prepares to vote in a referendum that may divide sub-Saharan Africa’s third-biggest oil producer.
On Jan. 9, about 3.9 million voters start a week of balloting to decide whether to remain part of Sudan or form the world’s newest nation, 54 years after Africa’s biggest country by area gained independence from the U.K. A majority and a 60 percent turnout are required for a valid result, which is scheduled to be announced Feb. 1.
A vote for independence will give the south control of about 80 percent of Sudan’s current oil production of 490,000 barrels a day, pumped mainly by China National Petroleum Corp. and Malaysia’s Petroliam Nasional Bhd. Sudan’s output is close to a quarter of the volume produced by Nigeria, Africa’s top producer. Independence would be declared on July 9.
“The balance of resources and power will shift overnight,” Andrew Natsios, George W. Bush’s former special envoy to Sudan and now a professor at Georgetown University, said in a telephone interview from Washington.
The authorities in Khartoum, Sudan’s capital, and in the south have pledged to ensure that oil production isn’t disrupted and to work out how to share oil revenue. About 8 million of Sudan’s 42 million people live in the southern region.
Oil Cooperation
“They’ll put behind them the usual rhetoric of demonizing each other,” Fouad Hikmat, Sudan’s special adviser at the Brussels-based International Crisis Group, said in a Jan. 1 telephone interview from Khartoum. “I’m sure they will try to reach an agreement.”
While most of the oil is in the south, the export pipelines, the port and refineries are in the north.
With Southern Sudan depending on oil revenue for 98 percent of its budget, it has no interest in undermining crude exports, Southern Sudanese Energy Minister Garang Diing Akuong said in November in Juba, the region’s capital.
“We need cooperation between the north and the south so that the oil flows,” he said.
The vote is the centerpiece of a 2005 peace agreement ending a civil war that lasted almost 50 years, except for a cease-fire from 1972 to 1983, between the Muslim north and the south, where Christianity and traditional religions dominate. About 2 million people died in the second phase of the war.
Southern Sudanese overwhelmingly favor independence, according to an Oct. 20 study by the Washington-based National Democratic Institute, based on 63 focus groups surveyed in 48 locations last year.
Foreign Investors
An independent Southern Sudan would present foreign investors with “enormous opportunities,” Sebastian Spio- Garbrah, managing director of DaMina Advisors LLP, a New York- based research group, said in research note on Dec. 29. In addition to oil and gold, he said, the region is believed to have “abundant” deposits of minerals including marble, gypsum and chromite, which is used to make ferrochrome, an ingredient in stainless steel.
Southern Sudan would be free of the restrictions imposed on Sudan since 1997. The country has been classified by the U.S. as a sponsor of terrorism since 1993.
“Because Sudan has been under Western sanctions for more than a decade, many Eastern mining and energy firms have shied away from investing in the country,” Spio-Garbrah said.
Revisiting Sanctions
If the referendum runs smoothly and the government accepts its results, U.S. President Barack Obama will begin formal steps to evaluate the current designation of Sudan as a state sponsor of terrorism, Senate Foreign Relations Committee Chairman John Kerry told reporters today in Khartoum.
If Sudan is lifted from the terrorism list, “it takes you to the next step, which is to consider some of the sanctions,” said Kerry, a Massachusetts Democrat.
Besides the north-south peace process, resolving the seven- year conflict in Sudan’s western region of Darfur continues to be a key issue that would affect future relations between the two countries, the senator said. Kerry urged rebel groups to join peace talks, and for the government to cease hostilities by its army in the region.
The authorities in Juba are in talks with Toyota East Africa to construct an oil pipeline to Kenya’s Lamu port. The pipeline would take three to four years to complete, Akuong said.
‘Time Bomb’
“We are certain that an independent Southern Sudan will act as a positive force in the region, contributing to important regional and African objectives of peace, stability and development,” former South African President Thabo Mbeki said in a lecture at a cultural center today in Juba.
U.S. Secretary of State Hillary Clinton described north- south tensions as “a ticking time bomb” in a Sept. 8 speech at the Council on Foreign Relations. George Clooney has set up the Satellite Sentinel project using Google’s Map.Maker technology to monitor the border region. Aegis Trust, a London-based charity, said a return to war would cost more than $100 billion, about two-thirds of Sudan’s gross domestic product, in lost economic output and humanitarian and peacekeeping aid.
“A month ago we were much deeply concerned, but the recent developments have been very encouraging,” former U.S. President Jimmy Carter, whose Atlanta-based Carter Center is monitoring the vote, told reporters today in Khartoum.
President’s Pledge
Sudanese President Umar al-Bashir, in his last visit to Juba before the vote, pledged to respect the results of the referendum.
“If the south chooses independence, we will come and congratulate and celebrate with you,” he said on Jan. 4.
Al-Bashir’s government in Khartoum and the Sudan People’s Liberation Movement, which governs the south, would have to negotiate border demarcation, responsibility for the country’s $38 billion foreign debt and the status of Abyei, a disputed border region whose own plebiscite on whether to join the north or the south has been postponed indefinitely.
Southern Sudan is one of the poorest regions in Africa. Half of the population lives on less than $1 a day, 85 percent of the adult population is illiterate and one in seven women who become pregnant may die from pregnancy-related causes, the United Nations said in a document called “Scary Statistics.”
‘Good Life’
“Even during the war, we believed we could have a good life but somebody was blocking it,” Tito Mario Koul, a 35-year- old doctor in Juba, said in a Jan. 3 interview. “It was not caused by anything natural, it was not floods or drought, no, it was caused by somebody, and that somebody was the northerners.”
The International Monetary Fund said in its October Regional Economic Outlook that economic growth in Sudan would accelerate to 5.5 percent last year from 4.5 percent in 2009. That compares with a 2.5 percent expansion in Africa in 2009 and 4.5 percent last year, according to the African Development Bank.
The north-south conflict is older than independent Sudan itself. The first outbreak of violence occurred in August 1955, when a company of southern soldiers rebelled in the town of Torit against the policy of “Sudanization” as British rule was ending. Northerners took all senior posts in the south, except for six southerners in junior positions.
“The reason for all of this was the mistreatment of Southern Sudanese,” said Angelo Diing, 32, who returned from Australia in March to help set up chambers of commerce in the south. “This is why Southern Sudanese need separation.”
To contact the reporters on this story: Matt Richmond in Juba via Johannesburg at pmrichardson@bloomberg.net. Maram Mazen in Khartoum via the Cairo newsroom at mmazen@bloomberg.net.
To contact the editor responsible for this story: Philip Sanders in London at psanders@bloomberg.net.
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