Wednesday, April 25, 2012

China Agrees to Aid South Sudan, But Pipeline Efforts Stall

China Agrees to Aid South Sudan, but Pipeline Efforts Stall

New York Times
Published: April 25, 2012

BEIJING — China has welcomed the president of South Sudan, agreed to provide bank loans and humanitarian aid but it has stopped short of moving forward on an oil pipeline, a sign of the delicate position Beijing finds itself in as the biggest energy investor in both the new nation of South Sudan and its bitter foe, Sudan.

As the two new nations continued to edge toward outright war this week and Salva Kiir, the president of South Sudan, cut short his trip to China, the government here urged both sides to use international mediation.

Before oil-rich Sudan was partitioned into two countries last year, China financed the pipelines and refineries in the north to carry and process the oil that largely lies in the south.

Energy analysts say Sudanese oil makes up only three to four percent of China’s total oil imports, but China, traditionally reluctant to get involved in foreign disputes, is now at the center of attention in a looming conflict between two developing countries that depend on Beijing’s economic largesse.

A new Chinese special envoy, Zhong Jianhua, a former ambassador to South Africa, visited Sudan and South Sudan last month as China tried to maintain neutrality. The United States also has a special envoy, Princeton Lyman, a former ambassador to South Africa, and the two diplomats have been in touch, a senior Chinese official said Wednesday.

“We hope the China-United States cooperation will pay off,” said Cui Tiankai, a vice foreign minister, at a briefing at the Foreign Ministry in Beijing.

In the 1990s, when China first invested in Sudan as a source of oil, Beijing cultivated a close relationship with President Omar al-Bashir, who has been charged by the International Criminal Court with orchestrating genocide in Darfur.

The United States scorned Mr. Bashir but maintained close ties with the rebels in southern Sudan, and supported the breakaway province’s claim to statehood.

Mr. Kiir’s visit to China showed that Beijing was seeking to secure and expand its footprint in South Sudan’s oil sector, said Zach Vertin, senior analyst on Sudan and South Sudan for the International Crisis Group in Nairobi. The China National Petroleum Corporation is the primary Chinese operator in South Sudan, Mr. Vertin said.

South Sudan stopped producing oil in late January after it accused Sudan of stealing some of its oil meant for export. The tensions have since erupted into violence, with Sudanese war planes dropping bombs and South Sudanese forces rushing in at one point to occupy an oil-producing region, Heglig, in Sudan.

As a chief partner to the warring sides, China has also found itself a target.

In January, 29 Chinese road construction workers involved in building a $63 million road financed by the Export-Import Bank of China were abducted by rebels in the oil rich region of South Kordofan Province in Sudan. In February, South Sudan, angered that China was not sufficiently on its side, expelled the president of the Chinese oil consortium based in Juba, the capital of South Sudan.

Mr. Kiir’s trip to Beijing was interpreted as an effort, in part, to secure financing for a pipeline that South Sudan would like to build through Kenya to a port on the Indian Ocean. The new route would give South Sudan’s oil access to a port other than Port Sudan, located on the Red Sea, the main exit point for oil from the south.

China would be a logical financier for such a pipeline, said Li Xinfeng, a researcher at the Institute of West Asian and African Studies at the Chinese Academy of Social Sciences. But any decision by China would be made on a commercial, not political, basis, he said.

While the visit of Mr. Kiir showed that China was interested in improving its relationship with South Sudan, Beijing did not want to appear to be taking sides by announcing a major pipeline investment as the two countries seemed headed for war.

“Beijing wants to improve its relations with the south because the oil is there,” said Claire Wong, an analyst with PFC Energy in Singapore.

But for China to finance a pipeline that provided an alternative route for to carrying South Sudan’s oil north through Sudan would antagonize the Sudanese government and further inflame an already incendiary situation, Ms. Wong said.

“If the south went too far with a pipeline it would incite the north to stronger action against the south,” she said.

At a signing ceremony in Beijing on Tuesday between the Chinese president, Hu Jintao, and Mr. Kiir, South Sudan was promised more loans from China’s Export-Import Bank, assistance for anti-malaria drugs, solar energy projects and humanitarian aid. There was no mention in the accord of oil or a pipeline.

Bree Feng contributed research.

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