South Sudan: Sudan: Deadlock

Aug 31, 2014 | StrategyWorld
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August 31, 2014:  As the South Sudan government and the South Sudan rebels (led by former vice-president Riek Machar) continue the civil war, Intergovernmental Authority on Development (IGAD, East African intergovernmental group) mediators are pointing out that they are in the process of destroying their own oil industry. So far that argument has not produced a permanent ceasefire. Regional nations, the buyers of Sudanese oil (for example, China) and some UN agencies are also concerned about how to protect the oil fields. South Sudan has the third-largest proven oil reserves in sub-Saharan Africa.  Current productions is around 160,000 barrels a day. Maximum production is around 450,000 barrels a day. Mediators have also offered to discuss revenue sharing measures to encourage reconciliation between the government and the rebels. A diplomat involved in the negotiations (probably from Ethiopia) said that transparency in oil revenue and fair division of the revenue would go a long way to answering many of the rebel complaints about corruption and economic favoritism. One of the ideas under consideration is an independently-directed fund for South Sudan’s oil earnings.  South Sudan owes several investors who have helped pay for oil production facilities. The government also borrowed money based on future oil revenues. It cannot pay the debts when it is not pumping oil. Diplomats have indicated that China is interested in creating a revenue monitoring mechanism for South Sudan.