Oil and Southern Sudanese after Independence BY: Urbano Tipo: SUDAN
JULY 15/2011, SSN; Some political analysts say that the oil reserves in Southern Sudan will dry up by 2020. If that is true, then we have already used one-third of the quantity of the reserves. The proceeds of the output have been misused by the privileged few Oil Sheiks of the South who managed to put their hands from the very beginning in 2005. Technically, one doesn’t have to agree with the statement made on BBC that South Oil fields will get dry by 2020 because there are three separate basins in which oil reserves have been discovered; namely, Melut, Bentiu and Bor basins respectively. Only two basins Melut and Bentiu are operational. Melut and Bor basins are separated by an anticlinal axis in which there can be no oil migration between them. As of present no indications that these productive oil fields are getting exhausted soon. Discovery of oil in South have flash new understanding by geosciences about the tectonics and continental drift of the African Rift Valley. There could be more basins with oil not yet discovered. Just for the benefit of the doubt, let us assume that the analysis mentioned above is true that our oil will dry up by 2020. What will be the way forward? What precautions should be taken to make the maximum use of remaining oil proceeds in order to develop the Independent South Sudan adequately? How will we avoid these proceeds not to get into the hands/pockets of these few South Oil Sheiks? Oil companies generally do not have good reputation worldwide because of corruption. They come in to make profit. They do not participate in the development in the county they operate in. They destroy the environment without putting remedial measure to restore it. They have loose money use to bribe top government officials to keep blind eye of bad practices they are committing like not paying required taxes. The South as an independent state is now left to devise better system and good practices on how to use the remaining oil proceeds for development of the south. We have no experience in oil business which remains as a handicap for the south. Oil contracts are usually not revisable or amendable once signed. The current oil companies operating in the south did signed contracts with North Sudan government. Therefore the South is not obliged to honor these contracts. The South and Oil Companies should come up with contracts that are elaborate and detailed to include environmental protection and respects human rights. The rights of the communities in oil producing areas are violated since they always evicted and without compensations. Addis Ababa talks seem to have concentrated on pipe line issues rather than reviewing of contracts with operating companies in South Sudan. If the important aspect is taking oil to market destinations through pipe line, lets us review the following feasible options; 1. Current pipe line to Port Sudan: This pipe line was constructed when Sudan was still one country. The reason was probably based on gravity follow with minimum pumping stations. The gradient between oil producing areas in the interior and Port Sudan is about 300 meters above sea level. The pipe line is cost effective. Here depends on who owns the pipe line, the Government of Sudan or Oil Companies. Since this pipe line is already operating, then South Sudan can reach an agreement with North Sudan to continue exporting oil through to Port Sudan. 2. Construction of pipe to Djibouti: This pipe line has to climb the ridges and mountains of Ethiopia then slopes to the coast to Djibouti. Although some politicians think it is a shorter route than Port Sudan, the engineering aspect can also be challenging. Given the fact that the oil fields might dry by 2020, then route may not be feasible and cost effective. 3. Construction of pipe line to Mombasa in Kenya: It will be a nightmare to construct a pipe line from oil producing areas in South Sudan across Kenya to the port of Mombasa. It is the least option to consider. It is not cost effective neither will anyone give financial assistance for the construction of this pipe line. The first option seems to be most viable solution to export oil to outside markets, but with caution. Base on the public speech by SPLM Secretary-General that it could cost 41 US cents per barrel to reach the markets is not correct. Given the fact he has no mathematic background, he just grabbed the cents and nothing else. To prove that he is wrong and the person who told him lied let’s pose the following questions; what is the cost to transport one barrel of crude oil per one kilo-meter. What is the distance from a producing area, for instance, Hegillege in Bentiu to Bashari terminal in Port Sudan? Of course the distances from Bentiu and Paliog in Melut are different. Who will meet the operation cost of the pipe lines? What is the grade of our crude oil? The price of crude oil depends on the grade in the international markets. Will the crude oil be sold in Port Sudan or will be transported to the customers at their destinations like Hong Kong, Rotterdam or China? The price quoted by Mr. Secretary-General might not have put in consideration the overhead cost. It will be a surprise later the net profit the South get will just minimal to our expectation. The Secretary-General will have to put these questions into consideration when he is authorized to negotiate oil agreements next time on behave of South Sudanese. The next contracts should be environmental friendly and respect of human rights of South Sudanese. Previous contracts violated these codes, for instance, Chinese were permitted to shoot and kill natives they find within the vicinity of oil fields in Unity State. The communities in Melut are now suffering from pollution disasters. South Sudan is an oil producing region, but, do have a single refinery to meet its domestic needs. When the boundaries were closed recently, not allowing fuel to get into the South, price of fuel sky-rocketed in the South. This should be a lesson learned to think towards constructing a refinery. If the South were to establish refineries, this will create employment opportunities to South Sudanese in many aspects. Some industries will emerge as a result of by-products of the oil. Possible sites for construction of refineries are; Melut, Adok, Shambe, Juba and Kopeota subject to assessment results. Oil business is quite complicated. The South needS to survey the local markets and markets in the neighboring states like Ethiopia, Kenya, Uganda, Congo and Central Africa Republic in order to develop good market strategy. In additional, there is need to survey sites where refineries could be located with South. Oil in the South is for South Sudanese and their next generation. We know how the past the proceeds from oil sales were used since 2005. The priority was private pockets to built house in Australia, Kenya and Uganda. Upkeep of individuals extended families. Pay government employees salaries which include also ghost employees. Much of the proceeds were not accounted for. No one will account for July 2011 oil money. Who'll be responsible? Since the South in now an independent State, who will be responsible for marketing of oil from August onward? Who will control the proceeds, SPLM, Ministry of Finance or Governor of Central Bank? The reason for posing these questions is find better ways on how the next oil money can be use for the benefits of all South Sudanese without exceptions. Certain percent of the oil money can be invested on stocks on the Wall Street for our next generation. These of the money can be used to develop the infrastructures in the country. Urbano Tipo can be reach at [email protected] COMMENTS, PLEASE CLICK HERE Disclaimer: The views expressed above are solely those of the author(s) and do not represent those of the website. -- You received this message because you are subscribed to the Google Groups "JFD info" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/jfdinfo?hl=en.
