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Diplomatic community should act now to help resolve oil dispute between the Sudans

10th February 2012

The African Union, China, and western governments must push for an immediate resolution to the ongoing oil dispute between Sudan and South Sudan, said Global Witness today. The call comes as the two sides resume talks in the Ethiopian capital, Addis Ababa, and amidst heightened tension and talk of war.

Sudan and South Sudan have been engaged in protracted talks to determine the transit of South Sudan’s oil for export via Sudan’s infrastructure. A failure to reach a new deal has led to dramatic unilateral action from both sides within the last month. This includes the confiscation of South Sudan’s crude oil by Sudan in lieu of transit fees, and South Sudan’s subsequent decision to implement a full shut down of its production and seek alternative export routes. Public exchanges between the governments have become increasingly tense, both referring to the possibility of renewed war, as they appear to be preparing for confrontation along the border.

“The AU, China, the US, UK, and Norway in particular must engage at the highest diplomatic levels to broker a deal between the two sides,” said Global Witness campaigner Dana Wilkins. “The longer this dispute goes on and both economies continue to suffer, the more likely it is that the situation will escalate.”

In mid-January, Sudan began confiscating South Sudanese crude oil, including redirecting consignments reportedly worth more than $250 million which were destined for four oil tankers at Port Sudan. This follows action by Sudan to block several ships from entering or leaving the port. The Government of South Sudan responded by shutting down all production in its territory. As a result, neither country will have access to revenues from oil that they are so reliant on. It is unclear how either country can compensate for the loss of revenues resulting from these actions.

The oil sector provides for more than 98% of South Sudan’s annual Budget. The IMF estimates that, separate from this new dispute, the secession of South Sudan will cost Sudan more than $7.7 billion in lost revenues over the next four years. Prior to the shut down, South Sudan produced around 350,000 barrels per day, more than three-quarters of a united Sudan’s oil production. But the processing facilities, pipelines, and marine terminals necessary to export remain within the territory of Sudan.

“If this were a region of the world deemed to be of greater strategic importance, we would have already seen a more coordinated, robust, and high-level push from the international community to prevent the situation from deteriorating this far,” said Wilkins. “This effort needs to happen now and must include pushing for assurances of transparency and independent verification in any new oil deal. Without this, the intense mistrust which has fuelled the current dispute will come up time and time again.”

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Contact: For more information contact Dana Wilkins in the UK on +44 (0)7808 761 570, dwilkins@globalwitness.org or Andrea Pattison on +44 (0)7970 103 083, apattison@globalwitness.org.