Oil rows and workers caught in the crossfire force Beijing to develop political and military tools to accompany its ever-growing economic muscle

Sudan and South Sudan are dragging a reluctant China into their smouldering relations at a time when both sides say the situation is on the brink of open armed conflict. Beijing’s ‘win-win’ diplomacy in Africa serves it well when there are two winners. However, the case of Chinese workers held by the armed Sudanese opposition and the conflict between Juba and Khartoum over oil pose another test of Beijing’s commitment to non-interference.

South Sudan exports its crude oil through the north of what was until July a single country. Problems over pipeline transit fees and the use of export infrastructure hit a new level of crisis in mid-January. As the two Sudans’ relations deteriorated, China despatched Special Representative for African Affairs Liu Guijin to Juba and Khartoum (in that order) in December to urge restraint. He then went to Addis Ababa for Sudan talks organised by the African Union (AU).

South Sudan rejected an AU-brokered interim agreement that would have led it to pay Khartoum’s National Congress Party (NCP) regime up to US$6.5 billion and began to shut down its oil production (which provided the majority of crude exported from Port Sudan) on 22 January. Juba says Khartoum is treating it as if South Sudan were not independent and did not own its own oil. Beijing is urging calm, talks and solutions based on the principle of mutual benefit. Foreign Ministry Spokesman Liu Weimin said that oil was the shared livelihood of both Sudan and South Sudan.

Beijing is also struggling to find replacements for the oil which it normally imports from Iran. Until the production shutdown, it had been importing over 200,000 barrels per day from South Sudan and Sudan, estimated at 5-6% of its needs. The shutdown, completed on 8 February, has given Juba greater insight into its own oil industry. Until the Comprehensive Peace Agreement between the NCP and Sudan People’s Liberation Movement/Army (SPLM/A) in 2005, Southern oil exploration and production was tightly controlled by Khartoum and the producing companies: mainly the China National Petroleum Corporation (CNPC), Malaysia’s Petronas and India’s Oil and Natural Gas Corporation (ONGC). For the next five years, though, Juba did not have full access to the facilities and today, many oil workers are still Northerners or from overseas.

South Sudanese Information Minister Barnaba Marial Benjamin said that after the shutdown, his government had discovered that the Greater Nile Petroleum Operating Company – which operates in Unity State and is run by CNPC (40%), Petronas (30%) and ONGC Videsh (25%) – had 41 producing wells of which it had known nothing.

Virgin investors
Juba signed exploration and production-sharing agreements with CNPC, ONGC and Petronas only on 13 January. It says it will open negotiations with companies that have not developed acreage awarded prior to Independence on 9 July 2011, to find new investors and remove inactive companies. France’s Total has not developed Block B, south of the working fields, in which it holds a 32.5% share, since it froze activity in 1985 due to the war. Predictions for the area (which has yet to see a well dug, oil sources say) range from the wildly optimistic to the derisory.

Neither side in the oil row expects a quick resolution. Sudan’s President Omer Hassan Ahmed el Beshir has talked up the prospect of full-fledged armed conflict. South Sudan’s President Salva Kiir Mayardit wants oil to be part of talks that cover other outstanding disputes, including Abyei, which Khartoum seized, rendering it impossible to hold a referendum on joining the South, as the CPA stipulated. Southern negotiators also say Khartoum owes Juba oil payments under the CPA’s revenue-sharing clauses. A 2009 report by the London-based non-governmental organisation Global Witness showed that Khartoum and CNPC had been reporting different production figures, leading to lost revenue for South Sudan (AAC Vol 2 No 11, The oil revenue row).

The willingness of Chinese enterprises to operate in any African environment has helped them to win contracts to build roads and other infrastructure but it has also put them in harm’s way. Last year’s instability in Libya highlighted the political risk when Beijing evacuated thousands of its nationals who were working on big construction projects. This has not yet altered the corporate culture of China’s state-owned enterprises.

Corporations have adapted to hostile environments elsewhere. In Yemen, the China International United Petroleum and Chemicals Company (Sinopec) demanded that the Yemeni government provide security for its workers.

Beijing has not explained what workers from the state-owned Power Construction Corporation of China were doing building roads in South Kordofan in the middle of an armed conflict that has displaced more than 400,000 civilians. The PCCC was working on a $63-million road project financed by China’s Export-Import Bank. The opposition Sudan Revolutionary Front said it ‘will be used to support the National Congress’s genocidal military effort’. The United States-based Satellite Sentinel Project said the road was for military purposes, while locals said it was to facilitate gold mining by a French outfit. Negotiations over the captured workers mean that Beijing now has relations with a movement whose goal is to overthrow the NCP. The SRF told Chinese diplomats that all Chinese companies should evacuate Blue Nile and South Kordofan until the conflict was resolved.

The 28 January capture of Chinese workers was another cog in the conflict between Sudan and South Sudan. The Nuba people of South Kordofan are largely sympathetic to the SPLM-N. They provided tens of thousands of SPLA fighters during the 1983-2005 North-South war. The CPA promised the Nuba and Blue Nile people ‘popular consultations’. The SPLM-N fighters from the SRF captured 29 workers at El Abbasiya, near Talodi, while some 18 fled and one died in the crossfire with the Sudan Armed Forces. Khartoum described the workers as ‘hostages’ but the SPLM/A-N said that they were in a war zone and needed to be evacuated.

Asking Beijing to intervene
While negotiating the workers’ release, SPLM/A-N Chairman Malik Agar Eyre asked Xie Xiaoyan, the Ambassador to Ethiopia, if China would intervene to help to create aid corridors for civilians threatened by starvation and to pressure the NCP. The United Nations, Amnesty International, Human Rights Watch and several Western governments have accused the NCP of indiscriminate bombing in South Kordofan. Careful not to phrase his request as a demand, SPLM-N Secretary General Yasir Saeed Arman called on 31 January for China to support the demand for an international investigation into war crimes in the border conflict.

The UN and USA warn that famine is likely in those regions if relief is not delivered. The NCP’s South Kordofan Governor, Ahmed Mohamed Haroun, who was indicted by the International Criminal Court for war crimes and crimes against humanity, banned international aid groups from the region in June 2011.

Beijing’s Foreign Ministry sent a team led by Qiu Xuejun, Deputy Director of Consular Affairs, to Khartoum and Nairobi on 30 January. The following day, the ministry summoned Sudan’s Chargé d’Affaires, Omer Eissa Ahmed, to express its concern at Khartoum’s handling of the crisis. Beijing later praised Khartoum’s efforts to persuade the SPLM-N’s rebels to release the workers. Government Spokesman Rabie Abdel Aati said troops in South Kordofan worked with Chinese military advisors on rescue plans.

In China, a debate raged on internet forums and social networks about overseas security. On 9 February, Yan Zhiyong, Party Secretary of PCC, and Deputy Foreign Minister Zhang Ming welcomed the 29 freed workers home. Both were eager to show concern for those on the front lines of China’s economic and diplomatic adventures.

Source: AFRICA-ASIA CONFIDENTIAL