Abyei Oil Analysis

This article, a somewhat belated entry into the blogosphere, is the first in a series on conflict and geopolitics in Sudan and South Sudan. My hope is to collate facts as they unfold, summarizing past events and drawing the occasional conclusion. Rather than provide copious amounts of background information, I think it more beneficial to jump into the matter and let things unfold for themselves. Therefore, I’d like to begin wholly in the middle of things by looking into the connection between the contested politics of Abyei and the region’s oil politics. Consider the following text to be an introduction and preliminary thoughts.

The Abyei area lies west-southwest of the developed oil fields within the Greater Nile Petroleum Operating Company’s (GNPOC) concession area. This zone, comprising Blocks 1, 2 and 4, straddles the border between Southern Kordofan and Northern Bahr el Ghazal. The GNPOC’s rightholders are Sudapet (5%), ONGC Videsh (25%), Petronas (30%), and China National Petroleum Company (CNPC) (40%). A 20 July 2009 ruling by the Hague’s Permanent Court of Arbitration (PCA) adjusted Abyei’s borders; the Heglig and Bamboo oil fields, formerly under the joint administration of the Government of Sudan and the Government of South Sudan as per the 2005 Comprehensive Peace Agreement, were within the areas conceded to the North. While both the National Congress Party (NCP) and the Sudan Peoples’ Liberation Movement (SPLM) endorsed the decision, doubts have been raised about its implementation. Additionally, the ruling made no mention of rights to the subterranean resources or the system by which revenues were allocated under the CPA. The 2005 Agreement held that revenues from Abyei’s fields were to be divided as follows: 50% to the National Government; 42% to the Government of South Sudan; 2% each to Bahr el Ghazal Region, Western Kordofan, the Ngok Dinka, and the Misseriya people. The 2009 PCA decision, by placing Abyei’s oilfields firmly inside Sudan’s jurisdiction, renders the NCP free from the aforementioned obligation.

The politics of oil nevertheless retains a poignant place in the struggle over Abyei’s fate and the geopolitical game being played between Sudan and South Sudan. Since 22 January 2012, Southern Sudan has ceased oil operations through the Greater Nile Oil Pipeline, the major conduit between Southern/Sudanese fields and the export point of Port Sudan on the Red Sea. Southern Sudan’s current inability to independently refine and export its subterranean resources – which, incidentally, account for 98% of its annual income – forced it to rely upon Sudan’s infrastructure. However, the South Sudanese government ceased production following a dispute concerning the North’s oil transit tariff; Sudan demands over $30 per barrel while South Sudan insists the rate be cut to $1 per barrel, approximately the average global rate. The cessation of operations was further prompted by claims that Sudan had illicitly siphoned oil from the Greater Nile Oil Pipeline, depriving Southern Sudan of revenue. In order to end its dependence on Sudan’s refining and export infrastructure, South Sudan signed an agreement with Kenya to construct a pipeline from the former to the Kenyan port of Lamu. This project, agreed to on 24 January 2012 and begun in late February, is part of the Lamu-Southern Sudan-Ethiopia Transport (LAPSSET) Corridor and will include highway and rail connecting South Sudan, Ethiopia, and Kenya. Additionally, on 9 February 2012, South Sudan signed an agreement whereby a second pipeline is to be built through Ethiopia and terminating at the port of Djibouti. Sudan’s subsequent loss of the majority of its fields following the South’s secession, decreasing revenues in the fields it controls, the current loss of transit tariff revenue, and the possibility of its processing/export infrastructure being circumvented altogether have exacerbated tensions in the region.

These tensions have played themselves out in recent violence between South Sudan and Sudan over the last few months. The North’s bombing of Southern oil production facilities in the Upper Nile’s Unity state has been met with South Sudanese raids into the fields adjoining (and formerly part of) the Abyei area, specifically the Heglig field. While this violence has not hampered their output as of late March, an interruption of Sudan’s production could exacerbate existing tensions even further. The reason lies in the fact that the Heglig field yields half of Sudan’s oil revenue with an output of 115,000 barrels per day. As reprisals continue in and around the Abyei area and the referendum on the region remains postponed, damage to the fields has to potential to be an escalatory act and would render Abyei’s resolution all the more precarious.

[The key takeaway point is that oil is not directly involved in the resolution of the Abyei conflict. However, due to the precarious politics of oil outside the area in question, it may still affect and be affected a resolution of Abyei.]

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