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December 26, 2013

South Sudan Violence Hits Oil Industry

Days of clashes in South Sudan have hit the country's largest source of revenue as oil production was halted in Unity state after foreign workers fled the oil fields over fears of more fighting in the region.

"Unfortunately, the workers have closed the oil. Nobody closed it from us here," said former army General James Koang Chuol, who defected last week and took control of Bentiu, the capital of Unity state. 

"It is those technicians, fearing what is going on in South Sudan... yesterday they evacuated the area," he  said, adding that production has been declining all week.

A spokesman for the South Sudanese army said Wednesday that government forces are preparing to launch an imminent offensive to recapture the town.

Foreign workers are key to the functioning of South Sudan's oil industry, which provides the country with its only significant export and is the main source of government revenues.

Before a disagreement with Khartoum led to a production shutdown in January 2012, which was only lifted earlier this year, South Sudan produced half a million barrels of crude a day, accounting for 98 percent of government revenues and about 80 percent of gross domestic product, according to the Revenue Watch Institute.

The Unity State oil fields are run by the Greater Pioneer Operating Company, a consortium of Chinese, Malaysian, Indian and South Sudanese interests.

A statement on the website of the Indian company in the consortium says they shut down production four days ago, "due to the adverse security situation." 

The Indian company, ONGC Videsh Ltd. (OVL), confirms on its website that it and its foreign partners in the consortium have evacuated their personnel from South Sudan.

OVL said the shutdown was only temporary, and "operations will be resumed once the situation is normalized."

The South Sudanese Petroleum Ministry says Unity produced around 15 percent of the country's total oil output before the latest shutdown, which came hard on the heels of Koang's seizure of Bentiu at the weekend. 

'We Are No Longer Loyal to President Kiir'


Koang said he wanted to divert oil revenue away from the government in Juba and had no interest in halting production.

"There is no administration in the country, so the oil money cannot be taken by one side," said Koang, who has declared himself loyal to former Vice President Riek Machar, whom President Salva Kiir accused of orchestrating a failed coup bid which triggered the violence that has rocked South Sudan for 11 days.

"We are no longer on the side of Kiir. We have already decided to break away from his administration," said Koang, citing fears that he and other members of the Nuer ethnic group were being targeted by the government.

Reports from South Sudan say that people are being targeted along ethnic lines, with members of Kiir's ethnic Dinka group and Machar's Nuer group being hunted down and singled out for killing.

Kiir has repeatedly denied that the government is involved in the ethnic-based violence, but acknowledged in a Christmas Eve message that he has received reports that it is happening.

Kiir said in his message that any soldiers found guilty of targeted killings will be arrested and held responsible for their actions.

In a message that was translated into the Dinka and Nuer languages, U.S. President Barack Obama has called for an end to the "Inflammatory rhetoric and targeted violence" in South Sudan, and U.N. Secretary General Ban Ki-moon has said he is "especially worried” by reports of ethnically targeted killings in the conflict.

The United Nations has said thousands of people are likely to have been killed in the 11 days of clashes, although a precise toll is not available.

Tens of thousands have been displaced by the fighting, including some 50,000 who have sought refuge at bases and compounds of the U.N. Mission in South Sudan (UNMISS).