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Oil Investment and Conflict in Upper Nile State, South Sudan Contents brief 48 Oil Investment and Conflict in Upper Nile State, South Sudan Contents Acronyms and abbreviations 4 Abstract 5 Acknowledgments 6 Introduction 7 1 Methodology 11 2 Oil and conflict in South Sudan 16 Oil and conflict in South Sudan: Past, present, and future 17 The process of oil exportation until the shutdown 25 Conflict escalation after independence of South Sudan 26 3 Securing a livelihood in the oil field 29 Introducing Melut and Maban Counties 30 Livelihood options and dynamics created by oil exploitation 33 4 Analysis of local conflicts 43 Melut and Maban Counties: Conflicts during the civil war and their relevance after the CPA 44 Analysis of conflicts after independence of South Sudan 48 Analysis with a concept of social orders 59 Conclusions and recommendations 66 References 70 Appendix 79 With financial support from the German Federal Ministry for Economic Cooperation and Development (BMZ). brief 48 Oil Investment and Conflict in Upper Nile State, South Sudan Elke Grawert and Christine Andrä 3 Acronyms and abbreviations ABC Abyei Boundary Commission AUHIP African Union High-Level Implementation Panel on Sudan bpd Barrel per day CAADP Comprehensive Africa Agriculture Development Program CNPC China National Petroleum Corporation CSR Corporate Social Responsibility CPA Comprehensive Peace Agreement DPOC Dar Petroleum Operating Company ECOS European Coalition on Oil in Sudan EKH Egypt Kuwait Holding EPSA Exploration and Production Sharing Agreement FAO Food and Agriculture Organization of the United Nations GNPOC Greater Nile Petroleum Operating Company GoNU Government of National Unity GoS Government of Sudan GoSS Government of Southern Sudan GPC General Petroleum Corporation IGAD Intergovernmental Authority for Development JOC Joint Operating Companies MPM Ministry of Petroleum and Mining NCP National Congress Party NEITI Nigeria Extractive Industries Transparency Initiative NEPAD New Partnership for Africa’s Development NGO Non-Governmental Organization Nilepet Nile Petroleum Company NLA National Legislative Assembly NPC National Petroleum Commission OBC Operational Base Camp ONGC Oil and National Gas Corporation Limited OSIWA Open Society Initiative for West Africa Petronas Petroliam Nasional Berhad PDOC Petrodar Operating Company (short “Petrodar”) SAF Sudan Armed Forces SPLM/A Sudan Peoples Liberation Movement/ Army SPLA Sudan Peoples Liberation Army SPLM Sudan Peoples Liberation Movement SPLM-DC Sudan Peoples Liberation Movement- Democratic Change SSP South Sudanese Pound Sudapet Sudan National Petroleum Corporation UNDP United Nations Development Programme UNMISS United Nations Mission in South Sudan UNOCHA United Nations Office for the Coordination of Humanitarian Affairs UNSC United Nations Security Council WNPOC White Nile Petroleum Operating Company 4 Abstract his brief aims to contribute to the study of the rela- sion, led to continuous disputes about the allocation Ttionship between government, oil corporations, of oil wealth between the Government of National and local communities in South Sudan. Its area of study Unity and the Government of Southern Sudan. are the oil fields of Blocks 3 and 7 in Melut and Maban Counties, Upper Nile State, the largest oil producing Whilst the oil companies in Southern Sudan remained area in the country, which has been less well studied under the control of the central government, violence than the older oil areas in neighboring Unity State. The disappeared in the relations with the communities brief focuses on the impact of oil investment on local during that period. However, the National Secu- livelihoods and its potential for provoking conflict. rity Service continued to mediate between the oil companies and the communities regarding compen- Between 1983 and 2004, oil exploitation had been sation and community development projects. This embroiled with civil war. From the standpoint of commu- remained so for some time after Independence. nities in the oil areas, this had been a period of violent When the Government of the Republic of South displacement and atrocities committed by the Sudan Sudan replaced the Sudanese shareholder in the oil Armed Forces, and Sudanese and southern Sudanese companies in late 2011, it handed over community militias. The Comprehensive Peace Agreement (CPA) relations to the South Sudanese Security Service—a between the Government of Sudan and the Sudan direct copy of the Sudanese approach of shaping People’s Liberation Movement/Army (SPLM/A) of 2005 state–society relations, imitating the autocratic model and the subsequent independence of South Sudan created by the Government of Sudan. in 2011 might have opened a window of opportunity for local communities to peacefully coexist with the oil Disagreements escalated after independence of companies and participate in oil wealth. South Sudan in 2011, when the new state became the owner of most of the oil wells. Quarrels over compen- Based on field research in Juba and Melut County in sation and fees for the use of the Sudanese pipe- late 2011 and the outcomes of a stakeholder work- lines culminated in the shutdown of South Sudanese shop conducted in late 2012, this brief attempts to oil production in early 2012 and subsequent armed answer two questions: attacks by the Sudan Armed Forces (SAF) and the • Has the relationship between the oil company SPLA. The study shows that this harsh reaction has under review operating in Upper Nile State and its roots in mutual distrust and fear of renewed war the local communities changed after indepen- on both sides, fueled by the priority spending of oil dence of South Sudan, and if so how?, and revenues for armament and the build-up of the SAF • Which initiatives have local inhabitants taken to and SPLA. This action has pulled both countries into a improve their living conditions in the oil field? severe economic crisis. The analysis of the research findings shows that the In analyzing the local conflict, the brief reveals the state has always played a crucial role with respect to development of different social orders and their the impact of oil investment on communities. Under ways of accessing resources, providing security, and the rule of the Government of Sudan in Khartoum, internal relations of power as a war legacy. It distin- there had been a nexus between oil and the civil guishes between various orders and shows that the war in south Sudan. The government used the war to links between these orders are the entry point to provide free access to oil companies for exploration. improving relations between the communities, the oil This was accompanied by displacement and large- company, and the state in Upper Nile State and else- scale killing and, as a war legacy, caused entrenched where in South Sudan. hostilities and distrust, and led Southern Sudanese to sabotage the Asian-dominated oil companies The study ends with recommendations to political operating in Southern Sudan. After the return of the decision-makers, investors, and community represen- displaced people during the interim period after the tatives on how to tackle structural causes of exclu- CPA, land conflicts ensued. There was little transpar- sion and their inherent potentials for conflict. The ency in sharing data about oil production, export, and main proposition is to expand and diversify the local revenues from the oil produced in Southern Sudan livelihood options which rely mainly on oil revenues despite the fact that according to the Wealth-Sharing towards agricultural development and vocational Agreement in the CPA revenues were to be divided training in technical, mechanic and construction skills between the north and the south. This, together with required in sectors linked to the requirements of oil long-lasting quarrels about the Petroleum Commis- production. 5 Acknowledgments his brief and the research leading to it would not Christine Andrä wrote the chapters on oil and conflict Thave been possible without the sponsoring of and and on securing livelihood before she left BICC. Elke support by the German Federal Ministry for Economic Grawert completed the work. Thanks are due to Marie Cooperation and Development (BMZ), to which we Müller and Lena Guesnet, Dr Douglas Johnson, the herewith extend our gratitude. anonymous reviewer, and BICC copyeditor Heike Webb whose critical comments greatly helped to We are indebted to the Chairman of the Committee improve the text. Errors, mistakes in spelling names and of Petroleum and Mining of the National Legislative locating places may still occur. These are solely the Assembly in Juba, Hon. Henry Dilak Odwar, and to responsibility of the authors, and we apologize for this. Hon. Pascal Bandindi Ndura. They helped us to get access to the Ministry of Petroleum and Mining (MPM) Elke Grawert and Christine Andrä and the office of the Dar Petroleum Operational Company (DPOC) as well as to the governments of Upper Nile State and Melut County. Special thanks go to Hon. Odwar for making possible a stakeholder workshop in Juba in November 2012, which BICC conducted together with IKV Pax Christi, the Euro- pean Coalition on Oil in Sudan (ECOS) and the Sudan Council of Churches. Abdalla Deng Chol advised and assisted us during the field visit in Melut County in 2011 and provided valuable information and assistance during the stake- holder workshop in 2012. We warmly thank him for all his commitment and help. ECOS was a helpful and critical partner and encour- aged BICC to conduct the common stakeholder workshop. Kathelijne Schenkel deserves highest appreciation and thanks for her tireless efforts in orga- nizing the workshop. We extend our gratitude to the former Field Manager of DPOC, Hago Bakheit, who generously hosted us in the Operational Base Camp and sacrificed much of his time. We are also grateful to the former Commis- sioner of Melut County, Francis Ayod, and his Deputy Joseph Monybuny Nyok who allowed us to stay in their guesthouse. Further thanks are due to the manage- ment of DPOC and the MPM who facilitated the flights for the workshop participants coming from Melut and Maban Counties in November 2012.
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