TRADE: India Making Mistake By Investing in Oil in Sudan – Rebels

By IPS Correspondents Reprint | | Print |

Katy Salmon

NAIROBI, Jul 2 2002 (IPS) - India is making a “fateful mistake” by investing in oil in Sudan, warn rebels of the Sudan People’s Liberation Army (SPLA).

Last month, the Indian Cabinet voted for state-run Oil and Natural Gas Corp (ONGC) to invest 750 million U.S. dollars in the controversial Sudanese oil project.

“No company should get involved in exploration or exploitation of oil in Sudan during this time of war, whether it is Indian, Canadian or Chinese.

“The benefits of this oil do not go to all the Sudanese people. Only the National Islamic Front is using the oil revenues to buy more arms and kill the people,” says SPLA spokesperson Samson Kwaje.

“This is a government that is abusing human rights, that is killing its own people. It’s a government that is bombing its people.

“So for the Indian government to deal with them, they are being not only insensitive but also this is a disrespect of humanitarian law.

“We appeal to the international community, India being a member of the United Nations that has signed bills of rights and covenants, to get India to respect international law,” he says.

India is buying Canadian company Talisman Energy’s 25 percent stake in the Greater Nile Petroleum Operating Company (GNOC).

The company began producing oil from a concession near Bentiu, 750 kilometres south-west of Khartoum, in Aug 1999. Oil exports have brought billions into the coffers of the debt-ridden Sudanese government.

Talisman bought into the project in 1998. Ever since, it has struggled to defend itself from a barrage of criticism from shareholders, the Canadian public, and human rights and church groups who, like the SPLA, say the oil is fuelling the war.

Non-governmental organisations like Christian Aid charge that the government is using a “scorched earth” policy to clear the area of civilians, making it safe for investors.

These accusations have taken a heavy toll on the share price of the Calgary-based company, listed on the Toronto and New York stock exchanges. Finally, Talisman has bowed to the pressure.

But Talisman’s chief Jim Buckee does not see the sale as an admission of wrong. Not only will Talisman clean up its image in the eyes of morally conscious observers, but it also stands to make a tidy profit. Buckee describes the deal as “a very good exercise for our shareholders”.

The project includes a 12-million acre (4.8 million hectare) concession and 1,500 km pipeline to the Red Sea. In the last two years, GNOC’s production has risen from a lucrative 230,000 to 260,000 barrels a day. The company plans to increase this to 290,000 barrel per day (bpd) in the future.

Despite the financial incentives, the SPLA predict India will live to regret the investment.

“Morally it is wrong and the only solution that we can employ — as the Sudanese people — is to shut it down. To us, all oil installations in the country remain a legitimate military target,” Kwaje reaffirms.

“Let them do what they can with Khartoum, whatever deal they can make, but they stand to lose at the end,” he says.

India is desperate to buy equity in foreign oilfields to compensate for declining output at home. India imports more than two-thirds of its crude needs for its 17 refineries that process 2.3 million barrels per day.

ONGC aim to recover their entire investment in five to six years assuming a crude price of about 19 U.S. dollars a barrel.

For Indian oil minister Ram Naik, his country’s energy needs are more important than possible protests or rebel attacks.

“The Chinese are there, the Malaysians are there, and we have good relations with Sudan,” he argues.

The other partners in the venture are China National Petroleum Corp, with 40 percent, Malaysian state oil firm, Petronas, with 30 percent and Sudanese state-owned Sudapet with the remaining five percent.

Unlike Talisman, which went to great lengths to mount a moral defence of its investment, the Chinese and the Malaysians have shown no such qualms. The SPLA say these international investors have not contacted them to hear their side of the story.

“We don’t speak to them. They ignore us,” says Kwaje.

As a result, he charges, they remain ignorant of the effects that their business venture is having on the people of south Sudan, where the oil fields are located.

“Most of them do not know the realities of the war. They don’t even know where the oil fields are. The government is deceiving them in Khartoum that the oil fields are in the north,” he says.

Sudan’s oil exports have given fresh impetus to Sudan’s 19-year-old civil war.

A new report by Brussels-based think-tank International Crisis Group (ICG), ‘Organising for Peace as the War Escalates’, says oil revenues have allowed the government to purchase increasingly lethal weapons and expand use of air power.

Khartoum’s “battlefield edge will be heightened by the government’s purchase from Australia of airboats designed to travel in swamp environments and especially useful in the oilfield areas of Upper Nile,” say ICG.

“(Their) superiority will be further enhanced when newly acquired MiG-29s and search and acquisition radar become operational.

“One military analyst predicted that with Russian or Ukrainian pilots as part of the package, these MiGs will provide an integrated system that will be able to ‘shut the airspace down’,” says the report.

The government in Khartoum denies that oil revenue is being used to step up its military campaign and says it is willing to share oil revenues equally among the people of Sudan. However, the SPLA want the concessions shut down until there is peace.

Last year, the U.S. House of Representatives overwhelmingly passed a bill to bar oil companies with investments in Sudan from raising capital on U.S. markets. But it has been unable to make it through Congress because of opposition from the government and Wall Street.