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SOUTH SUDAN: Equitable Oil Deal Needed For Peace

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Protus Onyango

JUBA, Jul 7 2011 (IPS) - The sharing of oil between North and South Sudan needs to be urgently addressed otherwise conflict between the two regions will escalate and could possibly lead to civil war, according to government officials and rights organisations.

Ambassador James Morgan, who represented Sudan in Indonesia until June, said matters related to oil need an urgent solution.

“There is no oil in South Sudan now for a week, because the North blocked the pipeline before they started bombing Abyei. Sudan’s President Omar al-Bashir is insisting on a 50/50 percent share of the oil. But we just want to pay rent for the pipeline and the use of Port Sudan, which we use for our oil export,” says Morgan.

South Sudan produces 85 percent of the oil from Sudan. On Jul. 9 South Sudan will celebrate the birth of a new nation, the 55th nation in Africa, and will separate from North Sudan.

The speaker of South Sudan’s Legislative Assembly, James Igga, will proclaim the independence of the Republic of South Sudan, then the flag of Sudan will be lowered and the flag of the new republic hoisted.

President Salva Kiir will sign a new transitional constitution into force and then take his oath of office as president of the new country. The country will be divided into 10 states, all to be headed by governors.

But as South Sudan prepares to celebrate independence, the issue of oil sharing and the resolution of the conflicts in Abyei, Southern Kordofan and Blue Nile states are yet to be addressed.

Global Witness, an organisation which has analysed several trends regarding Sudan, says there needs to be greater transparency in Sudan over its oil revenues to help preserve peace.

“The most important thing about southern secession is what will happen to the oil revenues,” says Rosie Sharpe from Global Witness, which released a report on the country’s wealth.

“Without a new, equitable oil deal between the north and south, it is difficult to see how Southern separation will pass off peacefully,” she adds.

“A new oil deal between between north and south is essential to prevent a return to full-scale war. There has been much mistrust over whether the current revenue distribution system has been implemented fairly,” the report says.

The report also states that currently Sudanese citizens cannot be sure how much oil their country produces and therefore cannot be sure that the oil wealth-sharing agreement is being implemented fairly.

“It is therefore important that these issues are addressed,” the report states.

The Sudanese government and China National Petroleum Corporation – the region’s main oil company – have not adequately accounted for discrepancies in published production figures.

Since the 2005 Comprehensive Peace Agreement (CPA), North and South Sudan split the country’s oil revenues equally but analysts estimate that almost three-quarters of the daily 500,000 barrels of oil comes from the south.

North Sudan’s economy will suffer with South Sudan’s independence. According to Global Witness, oil revenues accounted for 50 percent of domestic revenue and 93 percent of Sudan’s exports in 2009. Already prices for food and basic goods are rising, as the government scales down on subsidies it feels it will no longer be able to afford.

Publicly, the northern authorities are optimistic and exude confidence. Nafie Ali Nafie, a close confidant of Sudan’s Al-Bashir and a former head of national security, said that those who spread rumors that the economy in the North would collapse due to South’s secession were “greatly deluded”.

But South Sudan’s reliance on oil, which provides 98 percent of its revenue, makes it vulnerable too. Since the CPA was signed South Sudan received almost 10 billion dollars in oil revenue. But many people say they have seen little benefit from the petrodollars, and South Sudan remains one of the least developed regions on earth.

If the oil stops flowing, South Sudan’s economy would collapse. The 85 percent of its people who depend on agriculture might not be directly affected, but the state would be unable to pay its soldiers and instability would undoubtedly be the result.

So it is paramount that oil keeps flowing after separation. South Sudan’s government has said it will respect deals that have already been signed and some oil executives have already moved to South Sudan’s captial, Juba, from Khartoum.

But in the long term the South will need to diversify its economy away from oil. “With additional discoveries, it is estimated that output will peak in the 2011-12 year and then gradually decline thereafter and is likely to run out in 20 to 30 years,” says Dirk-Jan Omtzigt, the Referendum Taskforce economic advisor.

There is no enough electricity in South Sudan but other businesses are booming. The construction industry leads the way and there are a number of buildings being erected in the region.

Leonard Moss, a civil engineer says he is happy with independence because it will now give the South Sudanese an opportunity to enjoy the proceeds from their natural resources.

“Our country has a lot of national parks and good rains, we shall prosper if everyone plays his role,” he says.

But a visit to shops owned by North Sudanese in downtown Juba two days before independence shows that many are not optimistic and are scared of being kicked out of the new country.

Abu Masri, a North Sudanese who sells spare parts, separation to will mean being expelled by the South Sudanese who feel the North has trampled upon them. He thinks that the assurance from Kiir that there will be no discrimination against North Sudanese is not enough to pacify people.

“We as traders not only fear negative reprisals like being forced to return to Khartoum, but also the possibility the Southerners will take most of Sudan’s oil with them,” says Masri forlornly.

But Dr. Barnabas Mariel Benjamin, South Sudan’s minister of information and broadcasting is upbeat. He is urging people to come out and celebrate the country’s new-found freedom.

“It will be a historic occasion for all our people who have travelled a long and difficult road to the birth of this nation. We all know we face many challenges ahead but we will face them as united, peaceful and independent and build a stable and prosperous country. Outstanding issues will be negotiated in a separate process, with the support of the international community,” Benjamin says.