Bloomberg News

China Expresses Concern Over Sudan Oil, Border Disputes

December 09, 2011

(Updates with comment by Chinese official in fifth paragraph.)

Dec. 8 (Bloomberg) -- China’s top envoy for Africa urged Sudan and South Sudan to resolve disputes over oil and their mutual border, citing concern that future instability may harm its investments in the region, Sudan’s Foreign Ministry said.

Liu Guijin made the comments after arriving in Khartoum today for talks with Sudan’s foreign minister and officials from the Oil Ministry, al-Obeid Murawih, a spokesman for the Foreign Ministry, said in an interview in the capital city.

“The Chinese envoy has expressed concern that current border tension and the delay in reaching an agreement on oil might be an indicator for future instability, which might harm Chinese investments in the region,” Murawih said. “Liu called on both governments to work on peacefully resolving the disputes over borders and oil as soon as possible.”

South Sudan last month accused Sudan of delaying a shipment of 600,000 barrels of oil to China International United Petroleum & Chemical Corp., due to be loaded by Nov. 30, prompting the company to write a letter of complaint. Unipec, as the Chinese company is known, is the trading division of state- owned China Petroleum & Chemical Corp., or Sinopec, China’s largest oil refiner. A 1-million-barrel shipment scheduled to be sent to Geneva-based Vitol SA by Dec. 1 was loaded on Dec. 3, according to South Sudan’s Oil Ministry.

“We are happy to see any progress,” Liu told reporters yesterday in Juba, South Sudan’s capital, before flying to Khartoum. China wants an agreement on transit fees reached “before the Christmas holiday,” he said.

Civil War

South Sudan seceded from Sudan on July 9 following a peace agreement in 2005 that ended a two-decade war between the north and south. South Sudan’s oil shipments are still shipped through northern pipelines to Port Sudan on the Red Sea.

Sudan says the two cargoes were delayed because of the longer processing time needed since it started last month to take a percentage of the south’s oil that it says should be paid as transportation fees. Negotiators from the two countries failed to reach agreement last week in African Union-brokered talks in Addis Ababa, Ethiopia, on the fees. The discussions are set to resume on Dec. 20.

“As China is the only player that has leverage with both Sudan and South Sudan, it’s very positive that China’s special envoy stepped in to talk with both sides about the stalled oil negotiations,” Kathelijne Schenkel of the European Coalition on Oil in Sudan, a network of European non-governmental organizations, said in response to e-mailed questions.

‘Highly Tense’

“I do hope however that their intervention is not only about the oil issues, but takes into account all other highly tense aspects as well, like the border demarcation,” she said.

The United Nations Security Council is scheduled to be briefed today on Abyei, a disputed region claimed by both sides where the UN stationed peacekeepers after fighting broke out in May. The council is expected to renew the mission’s mandate before it expires Dec. 27.

Sudan and South Sudan have both issued complaints to the council this month as fighting flared in the border area of Jaw in the oil-rich Unity state. South Sudan said its army has engaged Sudanese forces that crossed into the south and used Antonov bombers, Mig fighters and long-range artillery. Sudan also says the area is within its own territory and that it’s fighting insurgents backed by the south.

South Sudan assumed control of about three-quarters of the former state’s output of 490,000 barrels a day when it seceded in July. Last month it seized the stakes held by Sudan’s state oil company, Sudapet, in joint operations in the south with companies such as Sinopec, Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp.

For Related News & Information: On South Sudan’s Oil Industry: {TNI SOUTHSUDAN OIL <GO>} Top Regional Stories: {AFTO <GO>} Most-Read Africa News: {MNI AFRICA <GO>}

--Editors: Paul Richardson, Alastair Reed.

To contact the reporters on this story: Jared Ferrie in Juba via Nairobi at pmrichardson@bloomberg.net; Salma El Wardany in Khartoum via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.


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