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Daniel J. Graeber

Daniel J. Graeber

Daniel Graeber is a writer and political analyst based in Michigan. His work on matters related to the geopolitical aspects of the global energy sector,…

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Violence may Hinder Sudanese Oil Advances

South Sudan and Sudan made headway in resolving oil disputes lingering since January. A peace deal that secured South Sudan's independence last year called for equal divisions of oil revenue between the two countries. The south in January, however, stopped producing oil after the government in Khartoum started siphoning off oil to settle what it said were outstanding payment issues. Disputes over oil are among the lingering issues left over from the peace deal. U.S. officials declared the oil deal a victory but such optimism in the region is rarely durable.

South Sudan gained independence in 2011 under the terms of a comprehensive peace agreement reached with Washington's help in 2005. The deal ended one of the bloodiest civil wars in modern history but unsettled borders and differences over oil continue to threaten the peace. South Sudan gained access to most of the region's oil through independence, though Sudan maintained authority over export infrastructure. South Sudan in January halted its production of around 350,000 barrels of oil per day after Khartoum started siphoning off oil to settle outstanding payment issues. A deal brokered as U.S. Secretary of State was in the region calls on South Sudan to pay around $10 per barrel to Sudan in exchange for pipeline and export concessions.

U.S. Sen. John Kerry, D-Mass., chairman of the Foreign Relations Committee, said that while several "contentious issues" remained in the region, the oil agreement was a good first step.

"A lot of people said this couldn't happen and they were dead wrong," he said in a statement. "This is a clear and bold step toward peace and the promise of an economic lifeline for both countries."

Khartoum was criticized recently for using what was described as excessive force to quiet demonstrators upset with planned austerity measures. South Sudan, meanwhile, remains one of the poorest countries in the world. Without a reliable road transit network, the World Food Program was forced to air drop relief supplies to the impoverished population.

Global Witness, a non-governmental organization working to decouple natural resources from conflict, said the deal was "great progress," but lamented the fact the deal contained no safeguards to ensure implementation.  A spokesman for the Sudanese party to the negotiations, Mutrif Siddiq, said the oil deal doesn't fulfill the ambitions of both sides and its implementation would start "after understandings on security issues."

U.S. Special Envoy to Sudan Princeton Lyman said the loss of oil revenue was forcing Sudan to consider cutting back on its security forces at a time when U.N. officials are expressing concern about ongoing violence in Darfur and along the disputed border regions. Both sides earlier this year approached the brink of war over the disputed Heglig oil fields. Breaking the oil impasse may be a breakthrough in terms of short-term economics. If Sudanese authorities, however, are concerned about implementation in a tense security environment, then, as Global Witness notes, "the devil is in the details."

By. Daniel Graeber of Oilprice.com


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