Oil Transit Disputes Between Sudan and South Sudan
Video Transcript:
On Monday, military officials from both Sudan and South Sudan met to discuss security along their mutual border. Khartoum has been blaming Juba for supporting several different rebel groups operating in Sudan against the government -- a claim that Juba denies. Khartoum has issued an ultimatum that if South Sudan does not end its support of the rebel groups, Khartoum will stop South Sudan's oil from flowing through Sudanese pipelines. Ultimately, the objective for Khartoum is leveraging its pipelines to negotiate or extort further concessions on security issues from Juba. However, a lengthy shutdown of oil flow is unlikely.
South Sudan and Sudan have had a rocky relationship since South Sudan become independent in 2011. The biggest driver in the South Sudanese economy is the country's oil exports -- which could reach 350,000 barrels per day at maximum levels -- but the landlocked country must use Khartoum's pipelines to reach global markets. Initially, the two countries never agreed on the amount of transit fees that Juba would give to Khartoum in order to access those pipelines. Khartoum was accused of confiscating some of South Sudan's oil as compensation, causing South Sudan in return to stop oil production until a deal was in place.
The two sides reached an agreement on transit fees in September 2012, but Khartoum was insistent that the financial agreement was conditional on the two countries reaching security deals -- specifically, Juba halting its support of Sudanese rebel groups. In March 2013, the two sides agreed to a security pact that allowed for the oil production to restart the following month. However, Khartoum blamed Juba for not ending support for the rebels, and in June announced that if Juba did not end support, Khartoum would halt oil flow from South Sudan on Aug. 7.
This has caused several dominoes to fall in South Sudan. On July 23, South Sudanese President Salva Kiir Mayardit fired his entire cabinet and his vice president, Riek Machar, and the country's chief negotiator with Sudan. Riek Machar had been attempting to supplant Kiir as president during the country's next election cycle in 2015, and had already begun establishing networks with politicians who had previously supported Kiir. Since he lost his job, Machar has already begun campaigning for elections in the future. Ultimately, it is unclear who within South Sudan's national or regional governments has supported Sudanese rebels, but several different factions would stand to gain if South Sudan's oil exports do not resume and Kiir's popular support is diminished.
International partners have taken an interest in both South Sudanese politics and the regional dispute with Sudan. Following pressure from China and the African Union, Khartoum pushed back the shutdown date by 15 days to Aug. 22 as Kiir revamps his cabinet. Sudan postponing the deadline to Aug. 22 is a demonstration of the constraints on Khartoum's ability to shut down the pipelines. Khartoum is essentially using the threat of a shutdown as a bargaining tool, and has in the past leveraged its pipelines to gain high transit fees from South Sudan. Khartoum knows that a complete shutdown would only exacerbate the political turmoil in South Sudan, and such turmoil would postpone any potential security agreements, which would in turn hinder the collection of the lucrative transit fees that Sudan desires.
