Thursday :: Jul 22, 2004

When East Meets West In The Muddle - Part 1


by pessimist

"He who has the black gold makes the black rules."

That seems to be the motto for the strife assailing the residents of Southern Sudan. Granted, this civil war has been going on for over twenty years, initiated by religious differences between the Muslim-dominated North whose population is essentially Arab and the animist/Christian South whose population is Black. Religious war can be brutal and bloody, but it was only in the last couple of years that this war took on the worst aspects of genocidal proportions.

Rep. Hoeffel arrested in protest at embassy

U.S. Rep. Joseph M. Hoeffel was arrested yesterday outside the Sudanese Embassy, becoming the third congressman in a week charged with protesting what they described as genocide in the African nation. Human rights groups claim to have proof that the Sudanese government has armed, supported and given political cover to the Arab militiamen responsible. Sudan's government has denied involvement in the attacks against blacks in the region.

"What is happening in the Sudan is genocide," said Hoeffel, a Democrat and member of the House International Relations Committee who is running for the U.S. Senate against Republican Arlen Specter. His 13th District encompasses parts of northeast Philadelphia and Montgomery County. "It's government-sponsored genocide, and ethnic cleansing - partially based on race, partially based on religion," Hoeffel said. "It is wrong and it is time to call it for what it is: hateful genocide."

The good Congressman is partially right and partially wrong. There is a reason why this is so, but we'll look at the basic situation first.

Promoting regional peace dominates Annan's visit to Kenya

The Sudanese civil war started in 1983 when the Sudan People's Liberation Movement/Army (SPLM/A) took up arms fighting for self-determination in the southern part of the country, which has left some 2 million people dead, mostly through war-induced famine and disease. Somalia dissolved into chaos after the 1991 ousting of strongman Mohammed Siad Barre. The transitional national government, set up in 2000, controls only part of the capital and parts of the rest of the country.

Sounds a bit like a couple of other countries we've talked about recently. But this war isn't about terrorism of human rights violations. It does involve religious, economic, and racial differences, but those differences aren't why this war has become so vicious in the last year or so.

Why has it? The answer is parked outside your abode.

Oil companies accused of complicity in Sudan conflict, rights abuses

Human Rights Watch (HRW) charged Tuesday that Sudan's ample oil reserves were the main cause of the displacement, death and destruction wrought by the county's civil war. In a report entitled Sudan, Oil and Human Rights, released in Kampala, the New York-based rights watchdog accused the Sudanese government of displacing hundreds of thousands of civilians, and Mu>oil companies of being accomplices seeking to control oilfields. "Foreign oil companies operating in Sudan have been in complicity in this displacement, and the death and destruction that have accompanied it," the report charged. The report quoted statistics from the Khartoum government indicating that 60 percent of the 580 million dollars in oil revenues in 2001 was spent on the country's military, both for foreign weapon purchases and for the development of a domestic arms industry.

The 754-page report investigated the role of oil in Sudan's civil war, linking natural resource exploitation with human rights abuses in Africa's largest country. "Oil development in southern Sudan should have been a cause of rejoicing for Sudan's people, but instead, it has brought them nothing but woes," HRW researcher Jemera Rone noted in a separate statement accompanying the report. "In addition to its regular army, the government has deployed militant Islamic militias to prosecute the war and has armed southern factions in a policy of ethnic manipulation and destabilization," HRW charged.

The group alleged that oil company executives turned a blind eye to "well-reported" government attacks on civilian targets, including aerial bombing of hospitals, churches, relief operations and schools. "Oil companies operating in Sudan were aware of the killing, bombing and looting that took place in the south, all in the name of opening up the oilfields," Rone observed. Companies cited included Canada's Talisman Energy Inc. and the Swedish firm Lundin Oil AB, which HRW says are lead partners in two oil concessions in southern Sudan.

"Amid mounting pressure from rights groups, Talisman sold its interests in a concession in late 2002, and Lundin followed suit in June." They were replaced by the state-owned oil companies of China and Malaysia.

Oil and the Sudan aren't strangers.


China CNPC Discovers 2B Bbl Oil Reserves In Sudan-Report

China National Petroleum Corp., China's largest oil and gas company, has discovered 2 billion barrels of crude oil reserves in Sudan's Malut basin, boosting the company's crude reserves in the African country, China Petroleum News reported. According to the report, exploration started in 1975, when ChevronTexaco Corp. (CVX) discovered 168 million bbl of crude reserves. ChevronTexaco didn't develop the reserves due to its small scale.

Of the total reserves discovered, 600 million barrels are recoverable, said the CNPC-sponsored newspaper. CNPC holds a 41% stake. The remaining stakes are held by Qatari Gulf Petroleum Co. and two Sudanese companies. Sudan is CNPC's largest overseas oil and gas operation. In 2005, CNPC expects to raise its crude production in Sudan to 24 million tons/year from 12.68 million tons last year. CNPC's 2003 crude production in Sudan is forecast at 14 million tons.

The report said the finding cost is less than 22 cents/bbl, or about 20% of the international average.

Obviously, China has a serious cost advantage over ChevronTexaco, which might have played a role in the discovery of so much oil by CNPC, something ChevronTexaco should have had far more experience at doing. But China is an up-and-comer, whose annual oil usage is growing - rapidly!


Repercussions of China's economic boom

China is also hungry for oil, and has overtaken Japan as the world's second-largest oil consumer. China's economic boom will launch the country toward development of foreign policy and military strategy to protect access to their raw materials. China will look to expand military ties with commodity-exporting countries in Latin America, Africa, and the Middle East, and will also be forced to develop a strong blue-water navy.

Does this not add a new dimension to the recent dispatch of so many US Navy carrier battle groups toward Taiwan?

Already, China has deployed 4,000 troops to civil-war-ridden Sudan to guard its investment in an oil pipeline. According to a release from the China National Petroleum Company, the 770-mile-long pipeline (1240 km)will have a first-phase transportation capacity of 10 million tons per year.

China is also likely to emerge as a major player in financing development of natural resources in developing countries. Kazakhstan has welcomed Chinese involvement in their oil industry. The China National Petroleum Company has invested $700 million in Kazakhstan.

In Saudi Arabia, American firms were recently blocked from investing in its new natural gas industry in order to allow Chinese firms to invest.

Ah, such good friends, those Saudis! Think of how pleased both sides are the they are both good friends with George HW Bush! I guess this ensures that Poppy will keep The Idiot Bastard Son from interfering with any arrangements between the two countries. But why would the Saudis dump us to get cozy with China? Because they see China as being the victor in any contest between the US and China! Remember just after George took office and a US spy plane collided with a Chinese jet fighter? The Chinese sure do - and so do the Saudis!

China is now the world's largest consumer of many industrial commodities, and its robust economic growth may enact geopolitical transformations and force China to engage in stronger foreign and military policy, according to a recent article. According to global economist David Hale, the current economic status in China "is likely to be as transforming an event in geopolitics as America's arrival as a world power during the early decades of the 20th century."

"China's economic takeoff and new role in the global-commodity markets has occurred so quickly that the United States and other countries have not yet fully come to terms with it," Hale asserted. Hale's article, China's Growing Appetites, is published in the latest issue of Washington, D.C.-based international-affairs journal The National Interest.

Hale indicates that China's investment-to-GDP ratio is the highest in the world, nearly 45 percent, compared to most developing countries that are stuck anywhere from 20-30 percent. As a result of the economic surge, China is aggressively pursuing raw materials.

Hale said. In fact, "If the United States and Europe make it difficult for China to pay for oil imports with exports of manufactured goods, China could decide to pursue a more aggressive foreign policy to obtain oil from disputed territories," Hale reported.

Thanks, George!

But this thought occurs: If China has such a cozy deal with Saudi Arabia, home to the largest petroleum reserve in the world, why would they be interested in Sudan? Simple. The Saudis will run out of oil before China is ready with an alternative!


The Peak Oil Bandwagon

Oil investment banker Matthew Simmons has been raising a furor by publicly questioning whether Saudi oil wells really contain all of the oil that Saudi officials claim is there. Simmons has been quoted as saying that his extensive review of 200 technical papers by scientists working in the Saudi fields has led him to doubt the published figures. For many years the country's five major oil fields including Ghawar, the largest oil field ever discovered have provided the core of Saudi production, but oil field operators are injecting millions of barrels of sea water each day in order to maintain pressure within the underground systems. This practice maintains extraction levels; however, the aging fields all discovered between 1940 and 1965 are becoming depleted, and, when the inevitable decline in extraction rates begins, seawater injection could actually accelerate the process, resulting in a rapid drop-off in oil available on the export market.

Simmons's statements were evidently so worrisome to Saudi officials that the latter arranged a high-profile symposium at the Center for Strategic and International Studies in Washington, D.C. in late April, 2004, at which their own representatives, together with prominent US government officials, assured the world that Saudi Arabia's oil fields are robust and able to supply increasing global petroleum demands for decades to come. Saudi officials even took the extraordinary step of announcing that official reserve estimates of 261 billion barrels of recoverable oil are far too low; but for this claim to be credible, independent analysts will have to be shown evidence of spectacular new discoveries of which no word has leaked out.

Unless such evidence soon emerges, it would probably be safe to characterize the Saudi statements as an act of desperation intended to shore up US support for the increasingly embattled monarchy.

This cannot be assured by the Saudi royal family, for there is clear evidence that the scion of the Bush Dynasty may prove to be the last of his line. Further US support cannot be guaranteed as more evidence emerges on a regular basis of Saudi involvement in many anti-US activities around the world, Al Qaeda merely being the best-known.

But others still insist that Saudi oil will be plentiful for years to come! Who are we to believe? Before I put in my $2 worth, read this:


No Plan B

"The entire world assumes Saudi Arabia can carry everyone's energy needs on its back cheaply. If this turns out not to work there is no 'plan B.'

Global spare capacity is now 'all Saudi Arabia.' This is the world's insurance policy and no third party inspector has examined it for years. Conventional wisdom says 'don't worry. trust today,' but if conventional wisdom is wrong, the world faces a giant energy crisis.

Coming from someone who has advised the secretary of energy and the 2000 Bush campaign, this is a warning worth heeding.

So now we know why China is interested in the Sudan. They aren't alone.


Oil boom in east Africa predicted

Africa's Indian Ocean coast is poised to become a new source of oil and gas on the continent, according to a US oil industry expert whose firm has been carrying out satellite and geological surveys of the region. In an interview published on the US State Department's website, oil firm director Chris Machette-Downes said: "East Africa is very likely to become one of the hottest oil exploration frontiers in the next few years." Commenting on a survey of the coast from the Kenya-Somalia border to South Africa, he said that for years east Africa had only been regarded as good for natural gas production, but that view had changed. Oil production is already under way in Sudan. A host of companies are exploring offshore in the region, including Shell and the Anglo-US firm Aminex off the coast of Tanzania.

Mr Machette-Downes predicted that any major finds of oil in east Africa would be exported chiefly to oil-hungry Asian nations. Chinese and Indian companies, as well as the Malaysian firm Petronas, are already involved in oil extraction from Sudan.

Business is expected to be so good, Germany's Been Workin' On A Railroad


After 21 years of civil war, railway to link Sudan and Kenya

After 21 years of civil war, plans are underway for an ambitious railway line from Sudan to Kenya. A German company is to build the Euro 3 billion (Sh300 billion) project. The building of the railway - which would constitute a first-ever stable transport link between southern Sudan and its southern neighbours - could change the political and geographical landscape of the continent. It would, for the first time, connect the predominantly black and Christian south of Sudan with the rest of sub-Saharan Africa.

The rail is meant to give southern Sudan access to the port of Mombasa to be able to export oil from its vast oil fields on its own account. So far, all oil from southern Sudan is exported through a pipeline via Port Sudan under the authority of the mainly Arab government in Khartoum. At present, 450,000 barrels of oil are piped a day from southern Sudan to Port Sudan for export shipment.

"It's our lifeline of independence," said Dr Costello Garang, Commissioner for International Co-operation of the SPLM/A and designated member of a future government of south Sudan, during a recent visit to Hamburg in Germany. The railway line is estimated to cover 2,500-km and will stretch from Juba via Lokichoggio to Nakuru. Two additional lines are planned to connect southern Sudan with the towns of Gulu and Arua in Uganda.

The building of the railway - from the swamps of southern Sudan across the plains of northern Kenya through a vast territory of undeveloped land - could provide much-needed infrastructure to a remote region. The railway is estimated to cost Euro 3 billion including support structures such as tunnels and bridges. The ambitious transportation scheme is supposed to be partly pre-financed by donor countries, the World Bank and others, but shall ultimately be paid for by oil revenues from southern Sudan.

Under a recently negotiated peace and power-sharing agreement, north and south Sudan will share proceeds from oil revenues 50:50. In six years, the south will hold a referendum over full sovereignty and its political future.

I wouldn't be too sure of that! The south would need someone willing to take on China, for the Chinese are already allied with the Arab north. Let's see who the south might have to choose from.


Egypt hopes to help develop Sudan's oil sector

Egypt has signed an agreement to explore for oil and natural gas in Sudan. Egypt will prepare feasibility studies and begin unspecified contract work. Egyptian help could include investment and the transfer of technology and expertise. Egypt seeks to invest in the fields of exploration, drilling, refining and marketing of oil. Several unidentified Egyptian oil companies are currently operating in Sudan.

I would suggest that, should one look at a regional map, that Egypt is more likely to side with the north than the south - considering Egypt's southern border is Sudan's norther one. So they are out.


Greater Nile Petroleum to spend $700 mln in Sudan

An upstream oil conglomerate operating in Sudan plans to spend $200 million on exploration and development in addition to $500 million on production in 2005, industry sources said on Tuesday.

Greater Nile Petroleum Operating Company Limited (GNPOC), a joint venture of four companies, will produce 200,000 barrels per day (bpd) at the Adar/Yale onshore fields in Central Sudan, which will raise output at the North African country to 500,000 bpd. "Next year, there will be an additional output of 200,000 bpd. Now, GNPOC's output is 300,000 bpd," one source said. Sudan's oil minister had said last September he expected oil exports from Africa's largest country to reach 600,000 bpd by 2005.

China National Petroleum Corp (CNPC), parent of PetroChina, has a 40 percent stake, while Malaysia's Petronas has a 30 percent stake in GNPOC. India's state-owned Oil and Natural Gas Corp (ONGC) holds a 25 percent stake and Sudanese state oil firm Sudapet has the remainder.

That takes India and Malaysia off the ally list.


Indonesia's Medco Eyes Sudan's Energy Sector

Indonesian private oil company Medco is to engage in the oil sector in Sudan, a company spokesman said here. "Sudan has considerable energy potential," said Bambang Purwohadi, Medco's business development coordinator. Medco would develop Sudanese energy potentials and explore possibilities of engaging in pipeline production. The Indonesian company would also participate in oil drilling bids. Medco was hoping to begin its activities in Sudan next year, he said.

Indonesia, the world's most populous Muslim nation, isn't likely to side with the Christian/Animist south against the Muslim Arab north. Scratch them off.


Iran Oil Co Picks Sudan As 1st Foreign Oil Venture-Report

The National Iranian Oil Co. (NIO.YY) has chosen Sudan as a platform to launch international upstream oil activities, a senior Iranian oil official said Thursday. "The NIOC will begin its commercial activity on an international level in Sudan," Mostafa Khoie, managing director of the state-owned Petro-Iran Development Co., said in remarks carried by the oil ministry's information network Thursday. Khoie said NIOC is considering investing in the development of five onshore and offshore blocks, which the Sudanese government has scheduled for international tendering before the end of the year. The Sudanese government, which like Iran, is sanctioned by the U.S., is proposing a production-sharing model to develop these oil fields. This restructuring would make the government owner of the oil reserves, with NIOC paying to develop the reserves, like any private-sector company.

Also competing with Iran for a share in those developments are companies from Malaysia, India, Pakistan and the United Arab Emirates, he said.

Strike off Iran, Pakistan, and the UAE - Arab Muslim countries all! Looks like Pakistan won!


Pakistani firm undertakes seismic surveys in Sudan

A Pakistani firm has commenced seismic surveys at a number of sites at Al-Hasahaisa and Kamlin in Sudan in an initial move to oil explorations, official sources said here Monday. Aldhafir Petroleum Company kicked off the surveys last Saturday, and will continue until 15 July to assess, monitor and analyse the information prior to drilling oil wells between October and December 2004.


Sudan to pump half a million barrels of oil a day

Bahrain has been approached to develop and reconstruct Sudan's oil production capacity, bringing capability up to pumping half a million barrels of oil daily by the end of the year from the current rate of about 300,000 barrels a year. The project is worth 16 billion U.S. dollars. The oil will be pumped through a 500 kilometre pipeline, built with Chinese help on a budget of 1 billion U.S. dollars.

I guess the south won't be Bringin' On Bahrain!

Continues here

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