Sudan, South Sudan: A Pipeline Attack Amid Oil Talks

Courtesy of STRATFOR (subscription required), analysis of a recent pipeline attack in South Sudan:

Sudan, South Sudan: A Pipeline Attack Amid Oil Talks  Read more: Sudan, South Sudan: A Pipeline Attack Amid Oil Talks
The oil pipeline facility in Heglig, South Kordofan state, Sudan.


Sudanese army officials said June 13 that rebel groups operating in the contested Abyei region between Sudan and South Sudan attacked a pipeline June 12 and caused an explosion. Khartoum claims that the Justice and Equality Movement was responsible for the attack. This attack and other recent events increase doubt that South Sudan and Sudan will reach a settlement on the security and pipeline agreements that Sudan threatened to nullify earlier in the week. South Sudan still has a financial interest in ensuring that oil exports are possible, but the final decision rests with Khartoum because it controls the pipelines South Sudan needs, and it is slightly less dependent on oil transport revenues.

Tension between the two African countries remains high but can be controlled through mediation and dialogue over the course of the next two months. However, an event like the pipeline attack could create a more volatile crisis in which another total pipeline shutdown cannot be ruled out. Sudan is more likely to exact further concessions from South Sudan on security issues while keeping the oil flowing, since shutting down the oil could enable South Sudan to find financing for an alternative pipeline.


The June 12 attack targeted a pipeline in northern Abyei that connects the Diffra oil field to a processing facility in Heglig. This pipeline does not transport South Sudanese oil to Port Sudan, so the attack has no direct effect on South Sudanese oil production. The Heglig pump facility was recently shut down due to damage, and the Diffra field produces only a few thousand barrels per day so the direct results of this attack are minimal. However, the attack’s effect on the existing crisis between Khartoum and Juba could be considerable.

Before South Sudan’s independence, it was fighting a civil war against Sudan that saw many different rebel groups operate in separate regions of Sudan. Several of these rebel groups remain active in both Sudan and South Sudan. The Justice and Equality Movement is currently active in Darfur, and the Sudan People’s Liberation Movement-North is active in South Kordofan. Both groups used to cooperate with the Sudan People’s Liberation Army, which is now South Sudan’s military. According Sudanese officials, the Justice and Equality Movement has bases in South Sudan’s Unity state and is supported by the Juba government, although both Juba and the rebels deny this. Also, on June 9 Khartoum threatened to block South Sudan’s access to Sudan’s oil pipelines within 60 days because of possible South Sudanese support for the Sudan Revolutionary Front, which includes both the Justice and Equality Movement and the Sudan People’s Liberation Movement-North.

At the same time, Juba accuses Khartoum of supporting the Yau Yau rebels, who are active in Jonglei state. The Yau Yau rebels are reportedly resupplied using Sudanese military aircraft, while such extensive support has not been seen between South Sudan and rebel groups in Sudan. Considering that South Sudan’s rebel allies are so useful in its dispute with Sudan,  especially taking into account South Sudanese statements that they intend to retake the disputed Abyei region at any cost, the government probably could not block all support of these rebels by its citizens even if it desired to do so.

Sudan-South Sudan Border and Oil Fields
 Multiple sources of friction limit Khartoum’s relations with Juba. Many backers of Sudanese President Omar al Bashir, including within the military, continue to oppose South Sudan’s independence and the deals that have been made with the government in Juba. By taking an aggressive stance against South Sudan, al Bashir could limit the internal friction caused by this group while not necessarily having to sever cooperation on oil exports. The economic sanctions imposed by the international community are another source of contention within the regime. Khartoum could attempt to use a security crisis to force negotiations with third parties, such as the United States, to secure an easing of the sanctions against the country.

The tension between Sudan and South Sudan is forcing South Sudan to look at alternative pipelines. South Sudanese President Salva Kiir Mayardit met with Japanese Prime Minister Shinzo Abe in Tokyo on May 29 to discuss bilateral trade ties. Kiir also met with officials from Toyota Tsusho, which agreed to construct a $4 billion pipeline connecting oil fields in South Sudan with a port in Lamu, Kenya. While a contract to build the pipeline has been agreed upon, financing for the pipeline has yet to materialize, though Japan could finance part of it. Regardless, Juba will likely appeal to the international community for funding for the project. 

Sudan might be willing to accept the economic consequences of losing the revenue from pipeline fees indefinitely. Prior to the shutdown in January 2012, oil revenue made up about 40 percent of Sudan’s budget. Letting South Sudan access its pipelines would give Sudan revenues equal to about 20 percent of its budget. Over the course of 2012, Sudan’s deteriorating economy forced al Bashir to institute an austerity budget. The austerity, on top of high inflation, led to large, widespread protests in June and July 2012, but Khartoum’s police and security personnel have effectively limited the social backlash of a poor economy and a smaller budget. This could embolden al Bashir and make him willing to institute those economic changes in the long term if he believes it does not threaten his position, meaning he could use pipeline tensions as a political tool both internally and internationally. However, Khartoum could also face a diplomatic backlash leading to new sanctions because it failed to uphold the guarantees of security and cooperation that led the international community to loosen the sanctions slightly after the March 2013 agreements with South Sudan.

This entry was posted on Friday, June 14th, 2013 at 9:19 pm and is filed under Sudan.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

Comments are closed.

Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.