Tensions between North and South Sudan have continued to grow since South Sudan emerged as its own nation on July 9, 2011. The worst fighting between the two countries since independence began in March with reports of Sudan bombing southern oil fields. Fighting escalated dramatically in April when South Sudan armed forces temporarily seized the Heglig oil field, along the contested North-South border. The field, operated by foreign oil companies including China National Petroleum Corporation (CNPC) and previously responsible for more than half of Sudan’s oil production, is believed to have been significantly damaged.
The fighting came during increasingly contentious negotiations over longstanding unresolved issues including border demarcation, ownership of the Abyei region and oil transit fees. In January, South Sudan suspended oil production following allegations that Sudan was stealing the South’s oil. The landlocked South is dependent on pipelines running through Sudan for oil export. The shutdown has had significant economic repercussions for not only the two countries but also the multinational corporations operating in Sudan’s oil industry.
The Role of Oil in Exacerbating Conflict
The fighting around Heglig is just the most recent example of the potential for corporations’ activities to exacerbate conflict and instability in Sudan and South Sudan. The fighting over Heglig is not the first campaign to take control of oil fields. During the war fought between North and South from 1983-2005, fighting for oil fields resulted in serious abuses – including indiscriminate attacks and intentional targeting of civilians and the displacement of hundreds of thousands. The oil industry has also long been noted for the significant capacity it provides to the Sudanese government which in the past has funneled an estimated 70% of its share of oil revenue towards its military.
In addition to Heglig, Sudan is experiencing ongoing violence in South Kordofan and Blue Nile states, continuing attacks in Darfur and domestic tribal conflicts. All of this violence is not only dangerous to the people living in these regions, it also creates a risky business environment. Foreign oil workers have been the targets of attacks by rebel groups who perceive oil companies like CNPC as being partnered with the government in Khartoum. Last year 47 Chinese workers in South Kordofan were attacked. One was killed and 29 were taken hostage and released.
As a result of their direct and indirect connections to sources of conflict and the tremendous economic leverage they can possess, corporations are critical actors in Sudan and South Sudan. For that reason corporations not only have the responsibility to respect human rights but to go farther and take steps to contribute to a peaceful and stable environment that poses fewer risks to civilians and to the corporations themselves.
For more information, check out the Sudan Situation Memo, which includes more details on the fighting around Heglig, the ongoing violence in South Kordofan and Blue Nile States, the continuing attacks in Darfur, and other issues of tension between Sudan and South Sudan. The memo is produced by the Conflict Risk Network, which is a project of United to End Genocide.
The Conflict Risk Network also produces a Sudan Company Report, which is distributed to the Network’s members on a quarterly basis. The second quarter update was released on May 31. The report includes in-depth and up-to-date information on corporations with Sudan-related operations, analysis of potential risks and concerns related to their business, and actions taken to respect human rights. This information allows the Network’s members – including pension funds, some of the world’s largest asset management firms, government entities, university endowments, foundations, financial service providers and socially responsible investment firms – to harness the weight of their collective voice to take action against corporations who are not meeting their human rights responsibilities.