1
THE ROLE OF OIL IN THE SUDANESE CIVIL WAR
Dr. Sam L. Laki
Professor of Resource Economics
International Center for Water Resources Management
Central State University
Wilberforce OH 45384
(937) 376 6272
slaki@centralstate.edu
In 1978, oil was discovered at Bentiu, Upper Nile region of South Sudan by Chevron, an American
oil company. Former Sudanese President Jafaar Nimeiri intended to exploit the oil without
acknowledgement of the fact that the oil was discovered in South Sudan. He resorted to
manipulations such as 1) oil was found some 450 kilometers Southwest of Khartoum, 2) giving the
oil wells Arabic names, 3) attempting to create a Unity province to annex the oil fields to North
Sudan, 4) locating the oil refinery at Kosti, 5) constructing an oil pipeline from Kosti to Port Sudan
and, 6) excluding South Sudanese from the board of the White Nile Petroleum Company (WNPC)
and training in the science of petrology.
The Islamic fundamentalist regime of general Omer Bashir that came to power through a
bloody military coup on June 30, 1989 embarked on the exploitation of the oil in 1998 with the
help of Canadian, Chinese, Malaysian, French and Swedish oil companies. The Junta used
scorched earth policies to secure the area for oil development. The atrocities committed against the
Dinka and Nuer people included burning of houses, bombing of defenseless civilians, raping of
women and the abduction of boys and girls into slavery. These policies led to the depopulation and
the displacement of people from their ancestral homes. The oil revenue was used to purchase arms,
Mig fighters, and helicopter gunships from Ukraine, Russia and China to persecute the bloody war.
This tipped the war in favor of the pariah regime of Omer Bashir.
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1.0
INTRODUCTION
The Sudan had an area of one million square miles comprising of desert, savanna,
wetlands, highland and tropical rainforests. The northern two thirds of the country is home to
arabized and Islamized Africans and the southern one third is home to indigenous Africans. Sudan
obtained its independence from Britain on January 1, 1956. Except for a brief period of the Addis
Ababa agreement (1972-1983) and Comprehensive peace agreement (2005-2011), the country had
been at war with itself for 39 years of its 54-year life. The root causes of the vicious wars include
the role of religion in the state, race, geography, history, culture and control over the rich natural
resources of South Sudan.
In 2007, Sudan’s gross domestic product was $ 46.2 billion, per capita income was $ 950,
and an inflation rate of 7%, life expectancy was 59 years and a high rate of illiteracy. The total
population was 38.6 million comprising of 25.7 million North Sudanese and 12.7 million South
Sudanese. It was growing at the rate of 2.2 percent per year and population density was 16 per
square miles. Sudan’s debt rose from 17.4 billion in 2005 to 19.1 billion in 2007 (World
Development Report, 2012).
South Sudan fought for self determination but North Sudan would not let it go because the
territory was very rich in natural resources (water, land, forest, wildlife, fisheries, livestock,
minerals and oil). The discovery of oil in South Sudan by Chevron, an American oil company in
1978 reinforced the suspicions of South Sudan that North Sudan was only interested in exploiting
its natural resources but not the welfare of the people. General Omer Bashir who came to power
through a bloody military coup on June 1989 transformed the war into a Ajihad (holy war) by
forcefully conscripting young men into the military and sending them to fight in South Sudan. The
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Proclamation proved to be a useful tool for the mobilization of resources for the war.
2.0
THE EXPLORATION FOR OIL IN SUDAN
2.1
Early oil Exploration
During the colonial period (1898-1956), very little exploration for oil was done in the
Sudan due to low oil prices and an oversupply of oil in the world. There were only two western
companies involved in oil exploration during this period (Anglo-Persian oil and the overseas
Geological Survey of Britain). In 1920, representatives from The Anglo-Persian oil company
visited the Red Sea region to assess the oil prospects of the British-Egyptian condominium
government in the Sudan but the company decided against any further investigation claiming that
good source rocks were absent in the area and in 1950 the Overseas Geological Survey of Great
Britain conducted work in the same area but the results of their exploration was never published
(Dafallah, 1985).
The nationalization of foreign companies at independence in 1956 discouraged oil
exploration in the Sudan by western companies. The legislation passed stipulated that the
government of Sudan would get 70 percent and the foreign company 30 percent of the profits from
any oil found (70:30). This legislation provided no incentives for foreign oil companies to explore
for oil in Sudan.
In 1959, The Sudan government revised the petroleum resource development legislation to
a profit-sharing formula of 50:50. Soon after, a 30-year concession was granted to AEnte National
Indrocarbusis (ENI), a subsidiary of AAziende general Intaliana Petroli and AGIP mineraura
(Sudan) Limited@ of Italy to explore for oil in an area of 800,000 square kilometers in the Red Sea
region. The General Exploration Company of California was also granted a concession to explore
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for oil in an area of 800 square kilometers in the Red Sea region, the well the company drilled
south of Port Sudan was abandoned because no oil was found. Many wells were drilled but there
was no oil found. In 1962, Shell BP (Sudan) limited was awarded a contract to construct a 20,000
barrels a day refinery at Port Sudan that became operational by the year 1964. During this period,
many Arab governments also showed interest in the exploration for oil in the Sudan and some
limited exploration was carried out on the West Bank of the river Nile. Till the 1970s, all attempts
to explore for oil were limited to North Sudan. No company explored for oil in South Sudan until
Chevron embarked on oil exploration in 1974.
2.2
The 1973 World Oil Crisis
During the 1973 world oil crisis, the government of Sudan made a concerted effort to
attract foreign oil companies to explore for oil in the country by the passage of the AThe
encouragement of Investment in Economic Services act@ of 1973 which guaranteed foreign
companies tax exemptions, land concessions, low energy prices and property leasing rights.
Subsequently, the Economic Services Act of 1973, the Industrial Investment Act of 1974
and the Agricultural Investment Act of 1976 were all replaced by the AEncouragement of
Investment Act amendment of 1980" which designated a single agency to be in charge of all
matters pertaining to foreign investments. The government was convinced that an oil discovery
would free up funds from oil imports, pay for imports, improve the balance of payments and
provide the needed funds for the economic development of the country.
In the early 1970s, four foreign oil companies (Oshtec, American Pacific, Chevron, and
Paul and Collins) showed interest in oil exploration in the Sudan. In February 1974, Oshtec oil
company was granted a concession in the northern region which was revoked in 1976; in January
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1974, American Pacific was granted a concession in the Red Sea region but following its merger
with Chevron and Texaco, Chevron was delegated to execute its program; Paul and Collins oil
company was granted a concession North of Suakin in the red Sea region, and Chevron was
granted a concession North of Abu Shagara on the Red Sea region. During the period 1959-1974,
the entire search for oil was confined to North Sudan and the licenses issued either expired or were
surrendered to the government.
2.3
Chevron Oil Company in Sudan
In 1974, Chevron, an American oil company was granted a license to explore for oil in the
Central region of Sudan and the Upper Nile region of South Sudan in an area covering 516 million
square kilometers. The company commenced oil exploration in 1975 and by 1978 it struck oil of
commercial quantities at Bentiu in the greater Western Upper Nile region of South Sudan.
Soon after, the government of Sudan (GOS) and Chevron entered into a production sharing
agreement (PSA). The PSA they entered into stipulated shares in oil profits of 70% for GOS and
30% for Chevron for oil production less than 300,000 barrels a day; 75% for the GOS and 25% for
Chevron for oil production of 0.5-1.0 million barrels a day and; 80% for the GOS and 20% for
Chevron for oil production of more than a million barrels a day. The GOS gave Chevron the
exclusive right to: 1) conduct oil exploration; 2) transport the oil; 3) export and sell the oil and; 4)
provide appropriate supportive services for a period of 30 years. Chevron was required to provide
the infrastructure (roads, trucks, boats and barges) in return for the exclusive rights.
The PSA agreement underwent several amendments so that Chevron oil could recoup its
investments sooner rather than later. Chevron was required to set up a scholarship fund for the
training of Sudanese in Petrology. When Chevron struck oil in April 1978 at Bentiu in the Upper
Nile region of South Sudan, the GOS named the well unity 1; the well at Abu Gabra in South
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Kordofan region of North Sudan was not economically viable. The other economically viable
wells were Unity 11 and 111 and Hegleg (Panthou) in 1982 in the Upper Nile region of South
Sudan.
The 1972 Addis Ababa agreement did not contain any articles dealing with the use of
natural resources in South Sudan especially oil so it was natural that problems arose when oil was
discovered in South Sudan.
3.0
SUDAN GOVERNMENT MANIPULATION
The government of the despotic former president Nimeiri resorted to political
manipulations: 1) he did not want to reveal the exact location of the oil wells, 2) he gave Arabic
names to the oil wells in South Sudan, 3) he attempted to redraw the border between North Sudan
and South Sudan to include Kafia Kingi and the copper rich Hufrat el Nahas in Bahr Ghazal, South
Sudan and the oil rich Bentiu in Upper Nile and Renk for grain in Upper Nile to North Sudan, 4) he
took a decision to construct an oil refinery at Kosti instead of Bentiu where the oil was located and,
5) he decided to construct a pipeline from Bentiu to Port Sudan on the Red Sea to export the oil.
3.1
Location of the oil wells.
President Nimeiri gave a news conference to announce that oil was found in the Sudan
some 450 Kilometers Southwest of Khartoum since he could not bring himself to tell the nation
that the rich oil wells were located at Bentiu in South Sudan. It was just too much for the president
to acknowledge the fact that the economically viable oil wells were at Bentiu in South Sudan for
fear that the South Sudanese will demand their cut of the newly found wealth given that the oil
wells were located in an economically depressed region of the country.
The production of oil at Unity well II was estimated at 8,000 barrels per day, Unity III was
estimated at 2,600 barrels per day whereas Abu Gabra I was estimated at 560 barrels per day, Abu
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Gabra III was estimated at 3,300 barrels per day and Tebalti was only 100 barrels per day. Thus,
the most productive oil wells were all located in the western Upper Nile region of South Sudan, a
fact which the Sudan government refused to acknowledge on pure political and economic grounds.
3.2
Giving Arabic Names to the oil wells in South Sudan
The oil wells in North Sudan retained their local names such as Abu Gabra, Tebaldi and
Adar but those in South Sudan were given Arabic names translated as Unity I, Unity II, Unity III
and heglig (Panthou). This was a deliberate attempt to deny the existence of oil in South Sudan.
This situation was made worse when Chevron oil company decided to locate its headquarters at
Muglad in North Sudan rather than at Bentiu in South Sudan where the economically viable oil
wells were found.
3.3
The North-South Border dispute
In December 1980, a map attached to a regional government bill after the bill had already
passed the National Assembly included the copper rich Kafia Kingi and Hufrat el Nahas in Bahr el
Ghazal region, the rich agricultural land at Renk in Upper Nile and the oil rich Bentiu in Upper
Nile region of South Sudan to North Sudan.
This was a flagrant violation of the 1972 Addis Ababa agreement. Article 3 (iii) of the
Regional self-government Act of 1972 which was itself an organic law stipulated that the
ASouthern provinces of the Sudan means the provinces of Bahr el Ghazal, Equatoria and Upper
Nile in accordance with their boundaries as they stood on January 1, 1956, and other areas that
were culturally and geographically a part of Southern complex as may be decided by a
referendum@ (Badal, 1985).
Article IV simply stated that the three provinces thus defined will Aconstitute a
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self-governing region within the Democratic Republic of Sudan and will be known as Southern
Region (Badal, 1985).@ The disputed areas fell into three categories: 1) Kafia Kingi and Hufrat el
Nahas in Bahr el Ghazal which had been part of South Sudan before their annexation to North
Sudan by president Ibrahim Abboud to Darfur in 1963, they should have automatically reverted
back to South Sudan in 1972 as stipulated in the Addis Ababa agreement, 2) Abyei, Chali el Fil and
Kurmuk which are culturally and geographically part of South Sudan but had been part of North
Sudan since the colonial period (1905-1956) should reverted back to South Sudan as stipulated in
article 3 (iii) of the Addis Ababa agreement through a referendum which Mr. Abel Alier, former
president of a high executive council failed to organize to ensure the implementation of these
provision of the 1972 agreement and, 3) Bentiu and Abiem were an integral part of South Sudan.
The regional government bill should never have included them in North Sudan. Therefore, the
Sudan government did violate the letter and spirit of the Addis Ababa agreement and the
permanent constitution of Sudan that had incorporated the Addis Ababa agreement.
The Southern Region Parliament held a heated extraordinary session on November 28,
1980 at Juba to debate the Aborder dispute;@ the parliament gallery was filled to capacity with
students of the University of Juba and government civic servants. During the ensuring five hour
debate, most members of parliament charged that North Sudan was only interested in the
annexation of the resource rich areas of South Sudan (Bentiu for oil, Renk for grain, Hufrat el
Nahas for copper) rather than in the welfare of the South Sudanese. A unanimous resolution was
passed appealing to president Nimeiri to resolve the Aborder dispute@ and restore all disputed
areas to South Sudan. The president appointed a committee to study the border dispute and to
come up with a recommendation. Nemiri then issued a decree on December 31, 1980 to the effect
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that the boundary of South Sudan with North Sudan was to remain as it stood at independence on
January 1, 1956. The decree did not deal with the issue of Chali el Fill, Abyei and Southern Blue
Nile. The people of South Sudan were jubilant with the president=s decision.
3.4
Construction of the oil Refinery at Kosti
The original plans for oil exploration included the construction of an oil refinery at Bentiu
in Upper Nile, South Sudan but the minister of Energy and Mining Dr. Sherif el Tuhami in
December 1980 announced that an oil refinery was to be built at Kosti, North Sudan rather than
Bentiu South Sudan where the oil was found. President Nimeri decreed that the oil refinery was to
be located at Kosti and Mr. Abel Alier, president of the high executive council appealed to the
people of South Sudan to support this decision even though most South Sudanese argued that this
move would deprive the local people the benefits of technical training, employment opportunities
and infrastructural development from the oil industry. Many student demonstrations took place at
Juba in opposition to locating the oil refinery at Kosti which brutally suppressed by security police.
In March 1981, the Southern regional parliament debated and passed a resolution to the
effect that the refinery be sited at Bentiu. In April 1982, a decision was taken for the construction
of the mini refinery at Bentiu but this decision was never implemented. The government of Sudan
formed the White Nile Petroleum Company (WNPC) to develop the oil.
3.5
The construction of an oil pipeline
In 1982, the government of Sudan decided that the Kosti refinery was too expensive so in
August 1984 the government and Chevron oil decided to construct an oil pipeline 1425 kilometers
long to transport 50,000-100,000 million barrels of oil per day with three pump stations from
Bentiu to Port Sudan on the Red Sea at a cost of one billion American dollars to be completed in
1985. The Sudan government and Chevron wanted to export the oil for Chevron to recoup its
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investments sooner rather than later and the GOS wanted to generate foreign exchange, improve its
balance of payments and make payments on its huge foreign debt.
A San Francisco company conducted a survey to determine the best route taking into
consideration the topography and the soil to the Marsa Nimeri oil terminal at Port Sudan. Tender
documents were sent out in January 1983, six contractors bid. The contract was awarded to an
Italian company Saipam-Snamprogetti of Milano, a subsidiary of ENI. The contracts for the
project included the construction of an oil pipeline, production facilities, satellite communication,
marine terminal, working capital and financial interests to the tune of more than one billion dollars
but the actual construction never commenced when war erupted in 1983.
3.6
The White Nile Petroleum Company (WNPC)
WNPC was formed to conduct studies to develop the oil. The shares were as follows:
33.5% for Sudan government, 33.3% for Chevron, 16.6% for the Arab Petroleum Investment
Corporation and 16.6% for the International Finance group. The company had no South Sudanese
on its Board and no South Sudanese employees working for the corporation. Chevron was granted
the task of training Sudanese in Petrology but the company never included South Sudanese on the
training programs. Chevron made annual payments of $ 150,000 to the department of Geology for
scholarships and technical training of the north Sudanese.
4.0
THE SUSPENSION OF CHEVRON OIL OPERATIONS IN SUDAN
In February 1984, Anya Nya 2 rebels attacked the Chevron camp at Robkona near Bentiu
in western Upper Nile killing three and injuring seven expatriate company employees. Chevron
suspended all oil operations in the Sudan the next day until such a time when the security
conditions return to normal. This meant that the 1985 pipeline completion date could not be met
because of the poor security conditions in the oil exploration area of South Sudan. The government
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of Sudan offered Chevron military protection but the company declined the offer because of the
high risk of exposing its employees to another attack. The employees would have presented a
tempting target to the freedom fighters. This was a clear win for SPLM/A which had maintained
that the government of Sudan with the complicity of Chevron oil was only interested in exploiting
the natural resources but not the development of South Sudan.
Article XXII of the Government of Sudan and Chevron agreement stipulated that a delay of
the contract caused among other things by A . . acts of war or conditions arising out of or
attributable to war declared or undeclared@ would constitute a Aforce majeure@ that any delay
period caused by such conditions would have to be added to the contractual period of the project.
This meant that Chevron was never held liable for any breach of a contract when it stopped
operations given the bad security situation in the oil production area of South Sudan. The
government of Sudan exerted tremendous pressure on Chevron to resume oil operations in western
Upper Nile but Chevron refused to take the risk of exposing its workers to further rebel attacks.
The government of Sudan and Sigma International limited of Mr. Adnan Khashogi, a Saudi
millionaire entered into a memorandum of understanding to create the National Oil Company
(NOC), a joint venture company with equal partnership between the government of Sudan and
Sigma International. NOC was charged with broad responsibilities of exploration, development,
transportation, importation and exportation of all petroleum products in the Sudan. Also, Sigma
International was awarded an exclusive right to oil, gas, and all hydrocarbons in the Sudan. The
agreement stipulated that NOC could acquire asserts of any foreign company at a fair market price
if the company did not fulfill its contractual obligations with the government of Sudan. This clause
was to exert pressure on Chevron to resume oil operations in Sudan even though Dr. Yousuf
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Bakheit, the Director of NOC and the Minister of state for legal affairs gave verbal assurances that
Chevron was never intended to be a target of the clause. The security situation in Sudan
deteriorated to an extent that the GOS and Sigma International agreement had to be cancelled
before NOC could become operational. This dealt a mortal blow to the Sudanese government that
had pinned much hope on the expected oil revenue for servicing its huge foreign debt and
developing the country.
5.0
THE SOURCES OF CONFLICT IN UPPER NILE
Competition for pasture and water has always existed between the Dinka and Nuer of
South Sudan and the Baggara of North Sudan which often lead to cattle raiding. These squabbles
among the herders have always been settled by meetings of the community leaders until successive
governments in Khartoum started to arm the Baggara to raid the Dinka or Nuer in order to expand
their territory to South Sudan. The government of Jafaar Nimeiri started to use the Bagara militia
(Marahelen) as a proxy forces in South Sudan. The government of Sadig El Mahdi continued the
policy of channeling weapons and ammunition to the Bagara Marahelen who used the weapons to
attack Dinka and Nuer villages, stealing livestock and abducting men, women and children.
President Omar Bashir supplied more weapons and ammunition to the Baggara Militia who began
to coordinate their incursions into Dinka and Nuer territory with government military operations as
well as participate in joint operations where villages were attacked and burnt, livestock stolen and
young men and women carried into slavery to North Sudan.
Mr. Paulino Matip, an Anya Nya 2 Nuer Militia leader allied with the Sudan government
was supplied with weapons and ammunition by the Sudan government to fight the Nuer and Dinka
groups that were allied with SPLM/A. Mr. Matip who operated from the government held towns of
Bentiu and Malakal coordinated his operations with government military operations as well as
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participate in joint military operations. Villages were burnt, livestock stolen and young men and
women abducted. This led to further displacement of the Nuer from the oil production region of
western Upper Nile to make room for oil operation by the foreign oil companies
In 1991, Dr. Riak Machar and Dr. Lam Akol broke away from SPLM/A and formed a rival
Nuer dominated movement, the Southern Sudan Independence Movement/Army (SSIM/A). The
Sudan government provided military support to SSIM/A to fight SPLM/A. In 1997, SSIM/A and
the government of Sudan signed the Sudan peace agreement that was to grant self determination to
South Sudan. A pro-government force of South Sudan Defense Force (SSDF) was set up with the
support of the government of Sudan but when the warlord Mr. Matip the Nuer militia leader
refused to join the new force, the Sudan peace agreement collapsed in 1999 and Dr. Machar
returned to the bush to establish a new movement called Sudan Peoples Defense Force/Democratic
Front (SPDF-DF). In May 2001, Dr. Machar rejoined SPLM/A and became deputy to Dr. John
Garang, the chairman of SPLM/A.
The 1991 SPLM/A split played into the hands of the government of Sudan and the so called
1997 Khartoum peace agreement facilitated the resumption of oil exploration and development in
South Sudan. The government of Sudan regarded the local Nuer and Dinka as security risk because
they are suspected of supporting SPLM/A so the government forcibly removed them from their
ancestral land to facilitate oil development by foreign oil companies. Therefore, the foreign oil
companies became complicit in the attacks on the people since these attacks originated from
facilities (roads and airports) built and maintained by the oil companies. The Sudanese military
used the roads to attack the villages and Antinov bombers and the helicopter gunships used the oil
company airstrips at Heglig and Mayom to fly sorties to kill defenseless people in the oil
producing region.
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6.0
THE DEVELOPMENT OF OIL IN SOUTH SUDAN
6.1
The oil Concessions in South Sudan
There are seven concession areas in South Sudan leased to foreign oil companies. Block 1
(Unity) held by the Greater Nile Petroleum Operating Company (GNPOC) which comprises of the
state owned China National Petroleum Corporation (CNPC) of China, the state owned Petronas
Carigali of Malaysia and the state owned Sudapet of Sudan. This oil rich block is located in
Western Upper Nile state of South Sudan. Block 2 (Heglig) was held by Talisman Energy of
Canada until its sale in March 2003 to the Oil and National Gas Corporation (ONGC) Vedish
limited, a subsidiary of oil and a natural gas corporation limited, Indian=s national oil company for
a net investment of 30%. Block 4 (Kaikang) held by Petronas Carigali of Malaysia, Sudapet of
Sudan and China National Petroleum Corporation of China. Block 3 (Adar) held by the Gulf
Petroleum Corporation of Qatar. Block 7 (Melut) is held by Sudapet of Sudan and China National
Petroleum Corporation of China. Block 5A held by Lundin Oil AB International Petroleum
Corporation (IPC) of Sweden and 5B held by IPC of Sweden, Petronas Carigali of Malaysia, OMV
Sudan exploration GmbH of Austria and Sudapet of Sudan. In April 2003, Lundin sold 40% of its
shares in block 5A to ONGC and Sudapet but it continues to maintain 24.5% in block 5B. Block 5
(Central) held by TotalFina (ELF) of France and block 6 held by China National Petroleum
corporation.
British Petroleum has investments in PetroChina, a subsidiary of CNPC, Exxon Mobil of
USA held interests in airport installations that sold aviation fuel supply at Khartoum and Port
Sudan airports to the Sudanese Airforce which was engaged in the bombing of civilian targets,
Rolls Royce of Britain supplied GNPOC with equipment and operational support, Royal Dutch
Shell of the Netherlands sold aviation fuel to the Sudan Airforce, Saras of Italy bought Nile blend
16
crude oil for its refinery in Sardinia, Siemens of Germany supplied telecommunication equipment
to GNPC, and Weir Pumps limited of Britain supplied pumping stations and drivers to the
Sudanese oil industry.
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6.2
The Foreign Oil Operations in South Sudan
Chevron Oil Co sold its major concessions in Sudan comprising of blocks 1, 2 and 4 to Arakis
Energy Company of Canada in 1992. In 1996, Arakis transported a small amount of crude oil to El
Obeid refining for domestic use. In 1996, Arakis sold 75 percent of its interest in the Sudan to
China national Petroleum Corporation (CNPC) of China, Petronas Carigali of Malaysia and
Sudapet of Sudan. The four companies formed The Greater Nile Petroleum Operating Company
(GNPOC). In 1997, GNPOC agreed to build an oil pipeline to transport oil from Unity and Heglig
oil fields in South Sudan to Port Sudan on the Red Sea for export but GNPOC lacked the expertise
and the financial resources for a complete oil operation that would have generated adequate
revenue for investments in Sudan.
In October 1998, Arakis energy sold its shares in Sudan to Talisman Energy of Canada.
The company completed the 1500 mile oil pipeline to Port Sudan at the Red Sea. The pipeline is
routed through blocks 1 and 2 to minimize the distance through the Dinka territory and Nuer
territory. The partnership in GNPOC became Talisman energy 40 percent, Petronas Carigali 30
percent and Sudapet five percent. The oilfields in the concession areas include Unity, Heglig, El
Toor, Toma South, El Nar, Tali and Munga in blocks 1 and 2. Timsah and Bamboo oilfields in
block 4. All of these oil wells lie in Upper Nile, South Sudan. By 1999, the Heglig and Unity
oilfields were fully developed; the pipeline completed and oil exports flowed at an estimated
production of 200,000 barrels per day.
Lundin oil AB of Sweden was part of a consortium that operated the concession in block
5a. Lundin invested resources in construction projects that did not come into operation. The
company had a joint investments in block 5B with GNPOC. Royal Dutch Shell has agreement with
GNPOC but was not yet involved in oil production. TotalFinaELF of France has the largest
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concession in block 5 in South Sudan but the company has been inactive. The other companies are
Gulf Petroleum Corporation of Qatar in block 3; Sudapet and China Petroleum corporation in
block 7.
The military and tribal militia attacks lead to destruction of property, looting of livestock,
and loss of crops resulting in the displacement of the local population. The government of Sudan
systematically denied relief agencies to take food to the displaced people as it inflicted heavy aerial
bombardment on the people. The oil revenue was not used for social development. The
government purchased 37 military helicopter gunships for military campaigns (with no distinction
between security operations and military operations). The government of Sudan drafted child
soldiers to guard the oil facilities and the civilian infrastructure (hospitals, churches, schools) were
targeted to ensure ethnic cleansing and genocide.
6.3
Oil production
The proven oil reserves in Sudan in billions of barrels are 0.2 in 1981, 0.3 in 1991, 0.7 in
2001 and 6.4 in 2005 which places Sudan third Angola second and Nigeria first. The total reserved
was estimated at 6.4 million barrels. The production of oil in barrels per day is 2 in 1995, 5 in 1996,
9 in 1997, 12 in 1998, 63 in 1999, 174 in 2000, 211 in 2001, 233 in 2002, 255 in 2003, 325 in 3004
and 379 in 2005. Oil exports in millions of dollars were 1800 in 2002, 2000 in 2003, 2600 in 2004
and 4200 in 2005.
The government revenue from oil was $ 61 million in 1999 and $ 596 million in 2000.
Sudan was granted observer status by OPEC in 2001. Military expenditure doubled in the same
period. The government of Sudan established three assembly plants for small arms and
ammunition at Kalakala, Shagara near Khartoum and Bageer near Wad Medani with the help of
Chinese technical support.
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7.0
THE IMPACT OF OIL EXPLORATION ON SOUTH SUDAN
The atrocities committed in the oil producing areas were carried out by the Sudanese
military, the popular defense forces (PDF), Bagara militia and the Nuer militia. When President
Omar Bashir came to power through a military coup in 1989, he took over the control of the
Sudanese military, purged non Islamic fundamentalist senior military officers, and created the
notorious PDF which was trained and deployed to South Sudan to fight a Ajihad= (holy war). The
government paid them no salaries so they were permitted to take war booty for compensation.
Their deployment to the war zones wrecked havoc in South Sudan.
The government forces, the PDF, Bagara militia and Nuer militia protected the foreign oil
companies and the companies in turn provided the government with facilities at Heglig, Bentiu and
Mayom for military aircraft to launch raids into the surrounding Nuer villages. The company roads
and vehicles facilitated the transportation of troops to conduct raids on villages. The government
deliberately followed a strategy to depopulate the oil producing area in order to facilitate the
pumping out of the oil by the foreign companies. The government sent helicopter gunships and
retrofitted Antinov aircrafts to bomb the villages in the oil producing areas while the army, PDF,
Bagara militia and the Nuer militias attacked the villages on the ground to guarantee a forced
displacement of the people from their homes to provide security to the foreign oil companies
because the government perceived the people as SPLM/A sympathizers. Those displaced received
no compensation for the loss of their property.
The government of Sudan followed a scorched earth policy that included aerial
bombardment, burning of houses, killings, tortures, abductions and rape of women. Therefore, the
exploitation of oil by foreign companies operating in the theater of war in South Sudan served to
increase the human rights abuses and exacerbated the long running conflict in Sudan. The human
20
rights abuses resulted in the death of 2.5 million and the displacement of 4.5 million South
Sudanese as a result of killings, burning of homes, and destruction of crops and looting of cattle.
The GOS used the oil revenue to buy weapons and ammunition which intensified the war and
expanded oil exploration and development leading to forced displacement of more people from
their ancestral homes. Thousands of South Sudanese became internally and externally displaced.
8.0
WEALTH SHARING IN THE COMPREHENSIVE PEACE AGREEMENT (CPA)
The CPA provided the guiding principles for the development of the oil Industry in South
Sudan, the setting up of the National Petroleum Commission (NPC), the treatment of existing oil
contracts, and the sharing of oil revenue in the interim period from July 8, 2005 to July 9, 2011.
The agreement called for a sustainable use of oil resources taking into consideration the
interests of local, state and national governments by creating a conducive economic environment,
clear local property rights, compensation of local land owners and the participation of oil
producing states in the negotiation of new oil contracts and setting up of the National Petroleum
Commission.
The NPC was charged with the monitoring of energy policies, negotiation of contracts and
the development of strategies for the petroleum industry. The local communities were to be
involved in the contract approval process to ensure that they benefit from the petroleum products.
The NPC comprised of 9 members with the president of Sudan and president of South Sudan
government serving as co-chairs, four members from the government of Sudan, four members
from the government of South Sudan and three members from the oil producing states. The
existing oil contracts had to be maintained by representatives appointed to oversee the remediation
of pollution problems and the compensation of the people affected by oil exploitation.
The agreement set up the formula for the sharing of oil revenues among GOS, GOSS and
21
the state/regional governments. The government was allocated money to the oil revenue
stabilization fund and 2% to every oil producing state. The net revenue is then divided as follows:
50% for GOS and 50% for GOSS. The revenue flowing to GOSS coffers was never close to the
amount stipulated in the Comprehensive Peace Agreement (CPA). There was a big discrepancy
between the revenue reported by the government and that reported by the foreign oil companies.
9.0
CONCLUSION
Petroleum was discovered in the Sudan in 1978 by Chevron oil company. An attack on
Chevron camp at Robkona by Anya Nya 2 rebels left three oil workers dead and seven wounded so
Chevron closed all oil operations in South Sudan. In 1992, Chevron sold its Sudan concession to
Arakis Energy of Canada which in turn sold 75% of its stake to CNPC, Petronas, Sudapet and
Talisman. In 2003, Talisman of Canada sold its shares to the national Oil and Natural Gas of India.
The Sudanese government cleared western Upper Nile population with the support of
Bagara militia and Nuer militia to protect the foreign oil companies. The oil production and
exportation came into existence in 1998. The of government used the oil revenue to displace more
people and purchase more weapons and ammunition to continue its brutal campaign.
The foreign oil companies aided the government’s military operations by making available
its infrastructure for military operations. The oil revenue fueled the conflict causing much hardship
with no tangible benefit to the people. The displaced people lost their livestock and could not farm
leading to starvation and death. The government violated the human rights of the people by
displacing them from their homes to make the area available for oil exploration. The burning of
villages, raping of women, abduction of children, destruction of crops and stealing of livestock
forced the people to leave their homes. Oil exploration brought misery and death to the people of
Upper Nile region.
22
10.0
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