China Says South Sudan Oil May Flow

As China and South Sudan work to rebuild the latter’s infrastructure through a $2.5 Billion grant to build new universities, China’s Africa envoy, Zhong Jianhua, says South Sudan’s oil may flow by November. This claim comes after South Sudan’s oil industry was halted due to a dispute. Reuters reports:

Tensions have lowered to a point where Beijing envisions “several agreements” being signed in September, Zhong told Reuters in an interview on Friday.

“We would expect that they will probably still carry out negotiations for other matters such as demilitarisation, cushion zones between borders, and the withdrawal of troops, so that by the end of the year — the resumption of oil production by November — that is what we expect,” he said.

Zhong’s outlook is slightly more optimistic than projections by South Sudan oil officials, who have said resuming output in Upper Nile state, home to South Sudan’s most productive oilfields, was possible by year’s end. Turning on wells in the state of Unity would probably take longer.

The South has welcomed China’s offers of development funds and its investment in the oil industry, but many still view Beijing with a degree of suspicion after years in which it acted as one of Sudanese President Omar Hassan al-Bashir’s strongest supporters.

According to the Washington Post, South Sudan has recently licensed the biggest revision of it’s oil exploitation:

The move is South Sudan’s latest attempt to remove itself from oil deals signed before its secession from Sudan. It comes amid renewed tensions with its northern neighbor over who should control the oil-rich regions that straddle their border.

South Sudan’s oil law passed late last year stipulates that it isn’t bound to deals agreed with the Khartoum government. Earlier this year, South Sudan renegotiated and signed a new contract with Petrodar, a consortium involving Chinese and Malaysian oil companies.

Since South Sudan’s secession from Sudan in July last year, tensions over a range of disputes have remained. The armies of the two countries were embroiled in a spate of clashes along the poorly marked 1,120-mile-long border early this year, threatening to culminate in an all-out war.

The two countries face United Nations sanctions if they don’t resolve their feud by Sept. 22.

Aside from the push to restart South Sudan’s oil production and the grant to build new universities, China’s involvement in the region, according to another Reuters article, includes a $158 Billion loan to build an airport in Juba.

Read more about China and South Sudan, via CDT.

September 16, 2012 10:31 AM
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