It Looks Like The Newest Country In The World Is Officially At War

by Adam Taylor

The situation between South Sudan and Sudan over disputed oil fields has been on the verge of blowing up into a full scale war for weeks.

Today AP is reporting that South Sudan’s president has said that Sudan has now declared war on his country.

This could be a big deal, with other African nations and even Sudan’s Chinese allies at risk of getting involved.

Read more: BI

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China urges restraint in Sudan dispute

China, the biggest investor in oilfields in the new nation of South Sudan, called for “calm and restraint” as a transit fee dispute threatened to cut off crude exports from the African producer.

News wires  23 January 2012 01:24 GMT

South Sudan said on Friday it planned to halt oil production within two weeks after its northern neighbour Sudan started seizing southern crude to compensate for what Khartoum called unpaid transit fees, Reuters reported.

“The Chinese side hopes that the two governments will fulfil their commitment to protecting the legal rights of Chinese enterprises and those of other partners,” Chinese Foreign Ministry Spokesman Liu Weimin said in comments posted on the ministry’s website on Saturday.

Sudan and South Sudan together made up 5% of China’s crude oil imports in 2011, or about 13 million barrels, ranking seventh among China’s oil suppliers.

Chinese customs data does not differentiate imports from South Sudan, which seceded in July, taking with it about two-thirds of the formerly united country’s oil output.

“Oil is the economic lifeline shared by Sudan and South Sudan,” Liu said.

“We urge the two sides to remain calm and restrained, avoid taking any extreme action and continue working together with mediation by the African Union and other parties to resolve their dispute through negotiation at an early date and to benefit the two countries and their peoples,” he said.

China’s foreign ministry used nearly the identical wording when the transit fee dispute first surfaced in November, Reuters reported.

It has sought to maintain good relations with Khartoum, a long-time ally, and South Sudan, home to investment by state-owned Chinese oil giants China National Petroleum Corporation and Sinopec.

China’s oil imports from Sudan grew by 3% in 2011, but average monthly volumes dropped to 998,000 tonnes from August onwards, compared with 1.14 million tonnes per months in the first seven months of the year.

Published: 23 January 2012 01:24 GMT  | Last updated: 20 minutes ago

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Shell Eyes Potential South Sudan Opportunities

by  Alexis Flynn
Dow Jones Newswires
Wednesday, January 04, 2012

LONDON (Dow Jones Newswires), Jan. 4, 2012

Shell is examining possible opportunities in South Sudan, which seceded from its northern neighbor, Sudan, in July last year, taking with it at least 75 percent of the areas known oil fields.

“We continuously review potential business opportunities around the world. We would like to better understand the current security, political and business environment in South Sudan, and how this has been impacted by the secession,” a Shell spokesman said in a statement.

Ethiopian newspaper The Reporter on Saturday said Shell is planning to construct an oil pipeline from South Sudan to Ethiopia. Citing “reliable sources,” the paper said a Shell delegation had visited South Sudan in November.

When asked whether Shell had met with local officials and discussed a potential pipeline project, a Shell spokesman declined to elaborate beyond the company’s statement that it wasn’t pursuing business opportunities in South Sudan “at the moment.” The company doesn’t have a presence in Sudan.

Although South Sudan retained most of the country’s output and is now producing around 350,000 barrels of oil a day, the landlocked country still depends on Khartoum for refineries, ports and export pipelines.

Similar challenges also exist elsewhere in East Africa, a burgeoning oil province following recent major discoveries in Uganda‘s Albertine basin but without the necessary infrastructure to bring its crude to market. French major Total, U.K. explorer Tullow Oil and China’s CNOOC are expected to invest at least $10 billion developing Uganda’s oil assets, which will include the building of a 1,300-kilometer pipeline to the Kenyan port of Mombasa.

However, analysts cast some doubt on whether Shell would be prepared to make a significant investment into a relatively unstable part of the world.

Relations between the two Sudans have worsened in recent weeks, with the office of South Sudan President Salva Kiir late Monday accusing Sudan of stealing its oil by diverting as much as 1.2 million barrels of crude oil.

Royal Bank of Canada analyst Peter Hutton said a move into South Sudan would have little obvious operational synergy for Shell, which have been exiting Africa in the downstream, adding that their experience in Nigeria has probably made the firm’s management more risk averse. “It all looks a bit of a stretch–not the direction investors will want Shell to go in,” said Hutton.

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