U.S. trails China in securing South Sudan oil business

Published September 22, 2011

Written by By Aamer Madhani, Published by USA TODAY

President Obama, the Philippines' Benigno Aquino III and South Africa's Jacob Zuma meet Tuesday in New York for the Open Government Partnership.

The United States is trailing China in the race for business in the new nation of South Sudan, despite leading the international effort to help South Sudan become an independent nation after decades of guerrilla war, says Princeton Lyman, the U.S. special envoy to Sudan.

President Obama and South Sudan President Salva Kiir will sit down for the first time on the sidelines at the United Nations today, and are likely to discuss South Sudan’s oil market and U.S. companies’ conspicuous absence from the marketplace.

Since South Sudan declared independence in July, it’s China — an ally of Sudan President Omar al-Bashir’s — that has been the most active in forging a way into South Sudan’s flush oil market. China has already dispatched its foreign minister to the capital of Juba, and is preparing to welcome Kiir for a visit at the end of the year.

Sudan remains under U.S. sanctions, complicating any prospects of American companies getting into the South Sudan market.

Lyman said because the two countries’ oil industries are so interconnected — sharing a pipeline and other infrastructure — it has been impossible for U.S. oil companies to enter the market now dominated by Chinese, Indian and Malaysian companies.

“I’m sure we’re going to open that door, but the rules of the game are still being worked out, and that is very frustrating to the South because they want American oil companies there,” Lyman told reporters.

The long-running north-south civil war, which claimed about 2 million lives before officially ending in 2005 with the signing of a peace agreement, effectively left al-Bashir and his government in Khartoum isolated on the world stage.

Oil-hungry China, however, continued to do business with al-Bashir’s regime as the rest of the world shunned Sudan.

Lyman said that China saw the handwriting on the wall and began laying the groundwork to build a relationship with Juba while maintaining its relationship with Khartoum.

“The South’s attitude is: ‘Fine. What are you offering? What are you going to do for us?'” Lyman said. “They see those companies as helpful in keeping the north from retaliating against the (nations’ shared) pipeline or something like that. I don’t get the sense they’re against working with countries that are working with the north.”

Andrew Natsios, a former special envoy to Sudan during the Bush administration, said South Sudanese officials are “nostaligic” for the days when big oil companies such as Chevron and Texaco operated in Sudan.
Ultimately, Congress — which remains deeply suspicious of al-Bashir — would have to approve any relaxation of sanctions for Western companies to return.
“Congress, to be very frank, commented constantly about the atrocities that were committed, but in terms of military assistance and in terms of economic investment, they are giving lectures to everyone else but failing to act themselves,” Natsios said.

Rep. Donald Payne, D-N.J., a longtime champion of South Sudan’s cause, said that lawmakers are awaiting guidance from the Treasury and State departments before taking action.

“We need to un-entangle South Sudan, but we need to do it while keeping the pressure on Sudan,” Payne said.

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