Oil Diplomacy in the Sudans

Oil Diplomacy in the Sudans

A recent agremeent between Sudan and South Sudan to restart oil exports is likely to improve the macroeconomic situations of the countries, while paving the way for future negotiations over land disputes, says expert Alex de Waal.

October 4, 2012 3:28 pm (EST)

To help readers better understand the nuances of foreign policy, CFR staff writers and Consulting Editor Bernard Gwertzman conduct in-depth interviews with a wide range of international experts, as well as newsmakers.

At the end of September, the presidents of Sudan and South Sudan signed a series of agreements allowing for the resumption of oil exports (WSJ) that have been stalled for eight months, and the establishment of a demilitarized zone along their disputed shared border. South Sudan seceded from Sudan in July 2011, annexing three-quarters of its oil reserves, but still relies on the north’s refineries and pipelines to export the oil. The accords, negotiated in conjunction with the African Union, failed to resolve the final status of contested border areas--including the oil-rich Abyei region--and the role of various rebel groups in the north-south conflict. Still, "the immediate effect is that oil production and export is going to resume as soon as technically feasible, and the level of confidence in the economies of both Sudan and South Sudan will increase," says Alex de Waal, executive director of the World Peace Foundation at Tufts University. He also notes that one of the agreements allows for the protection of the rights of Sudanese citizens in South Sudan and South Sudanese citizens in Sudan, which are "practical measures and should hopefully make the lives and livelihoods of ordinary Sudanese and South Sudanese somewhat better."

Could you provide an overview of the agreements reached last week between Sudan and South Sudan?

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South Sudan

The first of the two key agreements that were reached at the summit relates to the details of resuming the oil exports from South Sudan utilizing the infrastructure of Sudan, including the pipelines and the oil terminal ports in Sudan. South Sudan will be paying a range of fees for the use and upkeep of the infrastructure and a fee to the government of Sudan of slightly under $1 per barrel. These fees are pretty much in line with standard commercial rates for such infrastructure.

Over a period of three and a half years, back dated to the date of independence of South Sudan, a transitional financial arrangement [was struck] whereby $3.028 billion would be paid in installments from the oil revenues received by the government of South Sudan, in order partly to offset the fiscal and financial shock to the government of Sudan consequent on the secession of the South and the loss of oil revenue. The agreement was that South Sudan would cover about one-third of Sudan’s fiscal gap. One-third would be covered by Sudan’s own austerity measures, and the final third by international assistance.

The other key agreement is on the security side. The central component of this is that a mechanism for demilitarizing and monitoring the common border between the two states will be activated. This is the SDBZ, the Safe Demilitarized Border Zone, which spans ten kilometers on either side of the security center line as identified by the African Union panel, with the exception of one contentious area, the so-called "14 Mile Area," which was the subject of protracted negotiation. This fourteen-mile area between Darfur and Bahr al Ghazal will be demilitarized and jointly administered on a status-quo basis by the tribal authorities of the Rizeigat Arabs (on the northern side) and the Dinka Malwal (on the southern side).

One important element in the security agreement is the activation of what is called the Ad-Hoc Committee of the Joint Political Security Mechanism. The Ad-Hoc Committee is a standing mechanism, whereby senior security and military officers from the two governments will receive and investigate allegations and counter allegations made by one side against the other. This is the principal mechanism for implementing the two parties’ commitment not to harbor or support rebel forces against the other. If implemented faithfully this will require Sudan to cease supporting groups like the South Sudan Liberation Army, and South Sudan to cease support to the Darfurian rebels and the SPLM-North.

Also, one of the agreements signed at the summit [addressed the] issue of nationality and citizenship--the so-called "four freedoms" of Southern Sudanese in Sudan to own property, to work, to reside, and to move, and Sudanese in South Sudan also to have those [identical] freedoms. This is a commitment that the two countries have both made for some time, but it is only at the summit that this agreement was actually signed by the two presidents and the apparatus for incorporating these commitments into the laws of both countries, especially the laws of Sudan, specified. So, for the ordinary citizen of Sudan or South Sudan this is actually a very significant agreement. And related to that, there’s also agreement on opening the border for trade, which means that practical things like the export of food from Sudan to South Sudan, the opening of the border for migration by pastoral nomads and for South Sudanese who are migrant workers in Sudan. These are practical measures and should hopefully make the lives and livelihoods of ordinary Sudanese and South Sudanese somewhat better.

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South Sudan

How and when will unresolved disputes over Abyei and other territories be addressed?

According to a previous agreement between [Sudanese] President [Omar] Bashir and [South Sudanese] President Salva Kiir, the African Union High Level Implementation Panel, headed by South African President Thabo Mbeki, was authorized to propose a formula for resolving the Abyei issue at a summit level. Now the AU Panel did that at last month’s summit, and its proposal involved a referendum to be held in a year’s time (October of next year), with the eligible voters being permanent residents of Abyei--that is Ngok Dinka and other people who have a permanent place of abode in Abyei.

The proposal also involved a number of provisions to guarantee the rights of minorities, drafted with specific reference to the Misseriya pastoralists who rely on Abyei for seasonal pasture and water. South Sudan accepted this proposal, but Bashir did not accept. The AU Peace and Security Council is due to meet on the twenty-first of October. The PSC will receive a report from the African Union Panel with recommendations. Then either the two presidents will be asked to come to an agreement very quickly, or the AU has, according to the earlier decisions of its Peace and Security Council, the authority to provide a recommendation which should be taken by the two parties.

The two parties have also agreed to an AU team of experts which will study the disputed border areas and produce an authoritative but non-binding opinion, which will then be the basis for the two to agree on a permanent boundary.

Can you elaborate on the role of various rebel groups in this conflict, such as the Sudan People’s Liberation Movement-North in Sudan’s Blue Nile and Southern Kordofan states?

The conflict in the "two areas"--Southern Kordofan and Blue Nile--is both linked and separate from the north-south issues. It’s linked in so far as the government of Sudan insists that the SPLM-North is a political and military part of the ruling party and armed forces of South Sudan, and insists that South Sudan must disengage in a full and verifiable manner before it proceeds with peace talks. So Khartoum’s still looking for stronger and more verifiable assurances in that regard, and there is a risk that in the absence of such verifiable assurances, the security agreement between the north and the south will not be implementable in those areas adjoining the two areas of the Kordofan and Blue Nile which would be a serious problem.

In parallel, there are two other ongoing processes. One is the humanitarian process: The so-called tripartite group of the African Union, the UN, and the League of Arab States made a proposal for humanitarian access to the war-affected populations back in February. This was accepted by SPLM-North. There was a long series of negotiations between the tripartite and the government of Sudan resulting in a memorandum of understanding signed on August 4 [2012] to allow for humanitarian access. The implementation of that MOU has not yet happened.

The other issue is political negotiations. The AU panel did not succeed in getting bilateral talks between the SPLM-N and the government of Sudan, and the key sticking point is over the recognition of the SPLM-N. The SPLM-N delegation is insisting that as a prerequisite for any serious talks to begin, its existence as a legitimate and legal political party in [north] Sudan needs to be recognized. The government of Sudan is taking the line that it does not recognize the SPLM-N because the very title indicates that it is a sector of a broader organization, which is the ruling party of South Sudan. So the talks have been stalled on this issue and the requirement for moving ahead is now that the AU panel will continue to engage with both and continue to seek a middle ground.

With Sudanese oil exports having been halted since last winter, what will be the effect of renewed exports on the economies of Sudan and South Sudan, and the global oil supply?

The immediate effect is that oil production and export is going to resume as soon as technically feasible, and the level of confidence in the economies of both Sudan and South Sudan will increase. Their macroeconomic situations will improve. The oil companies indicate that most of the infrastructure, especially the major pipeline, has been maintained so that production and export can resume in a matter of weeks. However, the second pipeline, from the Unity oilfields, was seriously damaged in fighting in April, and will be out of use for some months. So we can expect that about 70 percent of South Sudan’s oil production will resume rapidly and the remainder during the course of 2013. Northern Sudan’s smaller level of oil production, almost entirely for domestic use, will also be back to pre-conflict levels soon.

How has China, a country with major oil interests in Sudan and South Sudan, helped to facilitate a resolution to the conflict between both sides?

China has taken a very simple position with regard to both parties, which is that it wants to see oil production and export resumed by a fair agreement as soon as possible, and it has pressed both parties to negotiate seriously under the facilitation of the African Union. It has shown no interest in any other solution than utilizing the existing infrastructure, which was built by the Chinese for this purpose. So it has played a low-key but very consistent and firm role.


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