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Analysis: Oil ties will prevent Sudan war, despite posturing
November 18, 2011 / 9:45 AM / in 6 years

Analysis: Oil ties will prevent Sudan war, despite posturing

JUBA (Reuters) - A suspected Sudanese air strike on a refugee camp in South Sudan will not trigger a return to war but belligerent posturing on both sides will complicate and slow talks over oil transit fees and other sensitive disputes.

Juba and the United Nations accused Sudan of bombing Yida camp in Unity State last week, plunging north-south relations to the lowest point since the South seceded in July, the culmination a 2005 peace deal that ended decades of civil war.

Khartoum has repeatedly denied the charges and accused the South of backing rebels in South Kordofan and Blue Nile, two war-stricken states on the northern side of the tense and poorly demarcated border.

Analysts say the tensions may make it harder for the two to agree on a transit fee to pump the South’s oil through Sudan’s pipelines, contested border areas, transitional financial assistance and debt - all issues left unresolved at the split.

Degenerating relations may also make it less likely the two will soon find a compromise for the disputed border region of Abyei that Khartoum seized in May after an attack on an army convoy blamed on southern troops.

“If the conflict were to get any worse ... obviously in the immediate term that would have a negative impact on the negotiations,” Chris Phillips at the Economist Intelligence Unit in London said.

“They’re not in a good place now anyway, so they would deteriorate even further.”

Sudan and South Sudan are expected to resume oil talks next week in Ethiopia after negotiations collapsed over the summer. In the past week both sides have ratcheted up their rhetoric.

Sudan’s President Omar al-Bashir, who is wanted by the International Criminal Court (ICC) for war crimes in Sudan’s western Darfur region, says he is ready to return to war.

His southern counterpart, Salva Kiir, has warned of Sudan’s “pending invasion” and the possibility of an oil war.


But despite the bellicose pronouncements, decades of brutal civil war have left citizens on both sides of the border with little appetite for renewed combat.

Sitting on a plastic garden chair in the dappled shade of his barracks in Bentiu, the deputy commander of the army in the South’s Unity state Mangar Buong said his country knew only too well the “colors of war.”

“On our side, we believe in peace ... we are now just for our own self-defense,” he said, a selection of mobile phones fanned out on the table in front of him. “In northern Sudan we want them also to be in peace.”

Perhaps the biggest factor preventing a slide into full-scale war is a shared interest in the continued flow of oil, which comes mostly from the South but reaches clients through a pipeline to the Red Sea terminal in Port Sudan.

“Their mutual reliance on oil was the single greatest disincentive to a new war in Sudan,” said Zach Vertin, an analyst at the International Crisis Group, referring to the interim period between the peace agreement and secession.

“That’s still the case. But now that the South is selling its own oil and talks have yet to produce a deal, that dynamic may be changing,” he said.

That does not rule out the possibility that the two sides could continue to wage a damaging proxy war through rebel militias on both sides of the border, further undermining confidence and hampering talks, analysts say.

Sudan and South Sudan regularly accuse one another of backing insurgencies in their territory, and just as often deny the other’s accusation.

Sudan’s army is fighting the Sudan People’s Liberation Army-North (SPLA-N) on its side of the border, while militias under the umbrella of the South Sudan Liberation Army (SSLA) have attacked towns in the South’s Unity and Upper Nile states.

Many of the SSLA’s ranking officers were members of the Sudan Armed Forces (SAF) prior to the secession, and some of their commanders live in Khartoum.

Sudan denies the South’s assertion that the SAF is supplying them with training, a rear base, facilitating weapons transfers and supplying mines that have killed dozens in recent months. Arms experts suspect otherwise.

Some experts also question Juba’s statements that South Sudan’s army has no connections to SPLA-N units fighting the Sudanese army in South Kordodan and Blue Nile.


Any low-level, hit-and-run attack on the oil fields by these rebel groups would have a serious impact on production, because it would lead to an evacuation of expatriate oil workers, without whom the rigs cannot function.

South Sudan says that 1,300 Sudanese oil workers pulled out of Unity state at independence, leaving a skeleton staff of just 300 expatriates and a handful of South Sudanese to keep oil flowing.

Production in Unity state is already down 25 percent against pre-independence levels, an official said last week.

For now, oil fields are unlikely to become a target because the SSLA’s interests appear aligned to Khartoum, said Jean-Baptiste Gallopin from political risk consultancy Control Risks.

“As long as the two Sudans share oil revenues, the northern government and its proxies will have no interest in disrupting oil production,” Gallopin said.

When the South seceded, it took with it three-quarters of the roughly 500,000 barrel per day oil production, causing Khartoum to ask Arab central banks for $4 billion to prop up its economy this year.

“For both sides, they need to decide if they can actually afford a new war. Who is going to pay for it? Khartoum are broke,” said Phillips at the Economist Intelligence Unit.

Reporting by Hereward Holland; Editing by Ulf Laessing and Alexander Dziadosz

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