South Sudan’s Machar to Keep Oil Flowing After Fields Captured

Dec 24, 2013 4:39 am ET

Dec. 24 (Bloomberg) -- Deposed South Sudanese Vice President Riek Machar said his forces control all of the country’s oilfields and plan to allow crude production to continue amid a conflict with government forces.

Forces opposed to President Salva Kiir’s rule seized the town of Malakal in Upper Nile State this morning and have captured areas in South Sudan’s states of Central and Eastern Equatoria in the south, Machar said in an interview today. Fighters loyal to Machar say they control Jonglei and oil- producing Unity state in the north. The government has denied the rebels control all of the country’s oil output, which generates 95 percent of government revenue.

“We’ll protect the oil workers, the oil companies, the oil installations and the oil can be transported and sold,” Machar said by phone from an undisclosed location. Revenue from crude sales will be placed in an escrow account “until the conflict is over,” he said.

Fighting erupted in South Sudan on Dec. 15, when gunmen attacked the presidential palace in the capital, Juba. The violence disrupted oil production in the country, which has sub- Saharan Africa’s biggest oil reserves after Nigeria and Angola, according to BP Plc data. At least 500 people have been killed in the ensuing violence that has heightened ethnic tensions, with Machar’s Nuer group pitted against the Dinka people of Kiir.

Petroleum Minister Stephen Dhieu Dau said today the government has control of about 25,000 barrels a day of oil production in Unity state, which he said produces 45,000 barrels daily. Rebels have taken over “parts of Unity oilfields” as well as Tharjath, which accounts for about 5,000 barrels per day of output, he said in a phone interview.

Continuing Production

“We will be producing partly until the government recaptures Unity,” Dau said. South Sudan army spokesman Philip Aguer said clashes are currently taking place in the oil- producing Upper Nile state, “but we don’t have the details about who is controlling it.”

South Sudan’s low-sulfur crude is prized by Japanese buyers as a cleaner-burning fuel for power generation. The oil is pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp.

ONGC repatriated its 11 employees and the company’s joint venture has shut down oilfields in South Sudan that were producing about 40,000 barrels per day, Finance Director S.P. Garg said yesterday.

UN Secretary General Ban Ki-moon asked the Security Council for 5,500 soldiers to add to the peacekeeping mission of 7,000 already there. The U.S. is positioning troops in the Horn of Africa region to assist in any additional evacuations in South Sudan, Pentagon spokesman Colonel Steve Warren said.

Emergency Meeting

At an emergency meeting yesterday in New York, all 15 members of the UN Security Council showed a “positive reaction” to Ban’s request for the troops, plus 423 police personnel, said Gerard Araud, French Ambassador to the UN and president of the council this month. The council may authorize the boost today, he said.

About 100,000 people have been internally displaced and about 45,000 are seeking protection in and around UN camps in the country, Araud said.

U.S. special envoy Donald Booth, who met yesterday with Kiir in the capital, Juba, said the president expressed a willingness to begin talks with Machar “without preconditions, as soon as his counterpart was willing.”

Conditional Talks

Machar said he’ll agree to talks when the government releases political detainees arrested in the aftermath of the Dec. 15 attack. The government said last week it arrested 10 people, mainly senior politicians and cabinet ministers in connection with plans to stage a coup.

“I have been contacted by the foreign minister of Ethiopia who led a mediation delegation to Juba,” he said. “I told him that I am ready for talks as long as my comrades who are under detention are released and are taken either to Addis Ababa, Nairobi or neutral ground.”

Kenyan Foreign Ministry Principal Secretary Karanja Kibicho said yesterday the two sides in the conflict agreed to an offer by Kenya to host peace talks.

South Sudan seceded from neighboring Sudan in July 2011 and took three-quarters of the formerly united country’s oil output. The landlocked nation exports all its crude, about 220,000 barrels a day, through pipelines across Sudan.

--With assistance from David Lerman in Washington and Sangwon Yoon in United Nations. Editors: Gordon Bell, Ana Monteiro