Tuesday, May 29, 2012

South Sudan Oil through Doba?

The UNSC on May 17 passed a resolution demanding the finalization of a jointly-run administration and police force for the disputed oil-rich border region of Abyei. The Council also demanded the immediate withdrawal of Sudanese security forces from Abyei, following South Sudan's troop pullout from the disputed region last week.

Border clashes between the two countries erupted in late March, marking the biggest confrontation between the two sides after South Sudan seceded from Sudan in July last year in line with a 2005 peace agreement ending 22 years of civil war between the Arab North and the Christian and animist South. More than 100,000 people are said to have been displaced by the ongoing hostilities.

Tensions escalated after South Sudanese forces moved into the oil-producing region of Heglig in Sudan's South Kordofan state on April 10, before eventually vacating the area. Sudan, which had responded by bombing South Sudanese territory, has since regained control of Heglig, which accounts for 60,000 of the 115,000 barrels of oil produced in Sudan daily.The oil fight is relatively easy to solve, if there is political will. South Sudan now has three-fourths of the old Sudan’s oil resources, but that isn’t much good without a way to get it to market. (A planned pipeline via Kenya is years, and billions of dollars, in the future.) The absurd discrepancy in the value that the two sides put on using Sudan’s pipeline ($36 versus $.60 a barrel) can be resolved by invoking global benchmarks. Market prices suggest a rate of $1 to $2 a barrel would be reasonable.