Sudan Threatens to Shut South Sudan Oil Over Rebel Support

Photographer: Trevor Snapp/Bloomberg

A worker climbs onto the drilling platform of an oil rig near Melut, in the Upper Nile, Sudan. Close

A worker climbs onto the drilling platform of an oil rig near Melut, in the Upper Nile, Sudan.

Close
Open
Photographer: Trevor Snapp/Bloomberg

A worker climbs onto the drilling platform of an oil rig near Melut, in the Upper Nile, Sudan.

Sudan threatened to halt South Sudanese oil exports within 60 days unless the neighboring state ends support for rebel groups opposed to President Umar al-Bashir’s rule.

Sudanese Information Minister Ahmed Bilal Osman said his government has evidence that South Sudan is backing renegade fighters in the western region of Darfur and the southern states of Southern Kordofan and Blue Nile. That undermines cooperation accords signed between the two nations last year and for which a timeframe was agreed in March, he said.

“It is clear that the purpose of supporting the rebels is to bring down the regime, which is why we have to stop the petrol,” Osman told reporters yesterday in the capital, Khartoum “We asked them to stop their support so that it wouldn’t affect all the agreements that were signed.” The decision to halt the oil flows may be reversed if South Sudan stops backing the rebels, he said.

Landlocked South Sudan exports all of its crude via pipelines that traverse Sudan to Port Sudan on the Red Sea. South Sudan seceded in July 2011 and took three-quarters of the formerly united country’s crude output of 490,000 barrels a day.

A dispute last year over how much South Sudan should pay for the transport resulted in its production being shut down for 15 months. Output resumed in April. The nation’s largest field, Palouge in Upper Nile state, started pumping 120,000 barrels a day last month and is expected to reach its full capacity of 250,000 barrels a day by September, Oil Minister Stephen Dhieu Dau said May 6.

No Notification

Brent crude, the benchmark price for more than half the world’s oil, traded at $104.52 a barrel at 1:42 p.m. Singapore time today. The July contract closed at $104.56 on June 7, the highest settlement since May 20.

South Sudan has yet to be officially notified about the planned shutdown, Information Minister Barnaba Marial Benjamin told reporters yesterday in the capital, Juba. South Sudanese President Salva Kiir will address the nation on the matter today, Benjamin said.

South Sudanese army spokesman Philip Aguer reiterated his government’s denial that it supports the rebel groups, and accused Sudan of deploying troops in Upper Nile state. The presence of the Sudanese forces is “unacceptable,” he said at the briefing alongside Benjamin.

China, Malaysia, India

Oil in South Sudan is pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd., known also as Petronas, and India’s Oil & Natural Gas (ONGC) Corp. Prior to the January 2012 shutdown, the country depended on crude exports for 98 percent of government revenue.

Sudan’s threat to halt oil flows follows a warning by Bashir in May when he said his government would close oil pipelines from South Sudan “forever” if the neighboring state backs rebels in the western Sudanese region of Darfur and the Blue Nile and Southern Kordofan states.

“Sudan won’t allow revenue from oil exports from South Sudan to be used for buying arms for rebels and mercenaries,” he said at a ceremony yesterday to mark the opening of an electricity plant on the outskirts of Khartoum. The remarks were broadcast on state television.

Clashes began more than 18 months ago in Southern Kordofan and Blue Nile between Sudanese government troops and the SPLM-N rebels who fought alongside the forces of South Sudan during the civil war. The fighting has displaced more than 1 million people, according to the United Nations.

Pipeline Plans

The SPLM-N has also formed an alliance with three insurgent groups in Darfur to create a “viable democratic alternative” to Bashir’s government, the Small Arms Survey, a research group at the Graduate Institute of International and Development Studies in Geneva, said in an April 2012 report.

South Sudan has sought to reduce its reliance on Sudan for oil shipments by announcing plans to build a pipeline either via neighboring Ethiopia to an export terminal in Djibouti, or to a port being built at Lamu on Kenya’s coast.

The country can export their oil via Kenya or Djibouti “or wherever they want to take it,” Bashir said.

To contact the reporters on this story: Paul Richardson in Nairobi at pmrichardson@bloomberg.net; Michael Gunn in Nairobi at mgunn14@bloomberg.net

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.