Amid the ceremonies and show of consensus that greeted the birth of South Sudan yesterday lurk tensions over revenue and distribution from the new nation’s oil industry.
South Sudan’s new government is already looking to better oil production and distribution as the key to it’s development.
The indebted north Sudanese government at Khartoum has been loath to lose the South’s rich oil deposits, with Sudan president Omar al-Bashir having threatened to cut off the current pipeline through the north if his government does not receive a larger slice of oil revenues.
Bashir, who currently wanted by the International Criminal Court for alleged human rights abuses in the Dafur region, waged a bitter and brutal war on the South that claimed up to 2 million lives and displaced a further 4 million.
Khartoum’s forces seized Abyei with tanks and troops on May 21, causing tens of thousands of people to flee and drawing an international outcry.
South Sudan seceded from the north on Saturday but the countries have yet to agree on who owns Abyei, stirring fears of renewed conflict.
Concerns also remain over the long-term viability and security of the south-north export pipeline. Â Oil accounted for 98% of the Bashir regime’s revenue and the vast preponderance of reserves have been handed to the South. Taking an increased slice of oil export revenues may be vital to the Bashir regime’s survival.
“For now we will continue with the current machanism,” Luol Deng, oil minister of South Sudan told the Khaleej Times last month, according to a National report. “But in the future, as we gain independence and pump more oil, these two pipelines will not be sufficient”.
Plans are now afoot to construct a new pipeline to the Kenyan coast or (more likely) either run a pipeline to Ethiopia or build refining capacity and move oil by road to Uganda’s Lake Albert for export.Â
South Sudan currently produces slightly under 500,000 barrels of oil per day (bpd). It’s new government may try to improve this by cancelling contracts with current IOCs in favour of new deals with western companies barred from entry due to international sanctions against Bashir’s regime.Â
Dan Large, a Sudan oil expert at London’s School of Oriental and African Studies, told the National “This is the billion dollar question. There has been lots of speculation that the south will tear up existing contracts and invite the Americans back in”.
