Natural Resources in Sudan and Africa: What Nobody is Talking About
For the United States (US), oil is a major part of their interest in Sudan, but it is not about Darfur's oil so much as it is South Sudan's oil. There is indeed oil in Darfur, don't get me wrong. The Chinese state oil company (CNOOC) already owns a concession on Block 6 that extends deep into Southern Darfur near the Central African Republic border. Rolls Royce Marine, a subsidiary of Rolls Royce UK, was even shipping diesel motors and pumps to Sudan for developing the field as the Chinese are interested in beginning test well drilling in Darfur. However, they are unable to do so because the Justice and Equality Movement (JEM) have been attacking the workers and preventing access to the site.
Sudan is China's largest overseas oil suppliers and China is also partnered with Iran in a major oil deal. In addition, they may partner with Pakistan and Iran if India backs out of their part in the deal. As China continues its exponential increase in oil-consumption, US foreign policy toward China has taken on a dimension that includes both slowing down development on China's foreign acquisitions and securing the rest of the major oil concessions before they do.
Sudan was declared a terrorist state by the US for harboring Osama bin Laden, who was accused of approving and financing the World Trade Center bombing in 1993 and an assassination attempt on Egyptian President Hosni Mubarak in 1995. Bin Laden collaborated closely with Dr. Hassan al-Turabi, a Muslim cleric who supported Omar al-Bashir's coup as a fellow member of the National Islamic Front (NIF). Upon being designated a terrorist state, a whole host of sanctions are instituted. For the US, it meant that US businesses could not operate within Sudanese borders under penalty of law. The US also could not import anything from Sudan, including oil. The only exception, thanks to lobbying from Coca-Cola, others in the food industry, and the pharmaceutical lobby, was gum arabic, of which Sudan has the largest supply in the world. The majority is currently harvested in areas under the Khartoum Government's control.
When South Sudan was given semi-autonomous status following the 2005 peace agreement, some grey legal area was created. Could a US business legally work only with the parallel administration in South Sudan, and still get away with it legally by being in sovereign Sudanese territory? Well, Marathon Oil decided to push the proverbial envelop, and signed up for Block B along with TotalElfFina and the Kuwait Foreign Petroleum Company. However, legal wrangling between Total and the UK-firm White Nile left the political situation in Block B unstable. Additionally, the divestment movement in the United States brought a lot of unwanted publicity to the oil companies operating in Sudan. Marathon turned over its shares to White Nile while Total still currently holds the majority shares over most of Block B. This is, in part, why the pro-American administration of President Sarkozy is supporting US efforts to get a UN and/or EU force into Darfur because the French desire a regional balance of power. The French currently maintains a quiet presence in Chad and Darfur. French soldiers are operating from the French military base in Bangui, Central African Republic.
Sudanese oil has increased interest for the French as their relations with Russia, the chief oil and (especially) gas supplier to Central Europe, have recently soured over Iran policy disagreements and France's pro-US relations. Europe still has the North Sea for some oil supply if need be, but it will not sustain Western Europe for too long and they need an outside source of supply. Sudan offers one such source. In addition, through their concession on Block B, the French will also expand sphere of influence and increase French access in the region. Total's operations in Africa have a longstanding history of acting as a front for the DGSE that goes back to the days of Jacques Foccart.
Additionally, the French are interested in the unexploited Uranium deposits in Darfur near the Central African Republic border. The French, as a result of not having any inherent petroleum supply of their own, depleting fossil fuel deposits in Europe, and stricter environmental laws through the European Union, have turned toward nuclear power plants as their primary alternative energy source and the uranium deposits would supply ample amounts of raw materials for the reactors in the future. However, some of the uranium deposits are located at the tail end of oil concession Block 6, which the Chinese own and wants to develop, as mentioned earlier.
In 2004, 79% of France's national energy production came from nuclear power, and in 2006, France commissioned the creation of a new high-tech reactor. France produces so much electricity from nuclear power that they export 18% of it to Britain, Germany, and Italy, which has kept electricity prices very low. Therefore, France's acquisition of uranium is not only important for them, but for other EU nations who import the France's extraneous nuclear energy as well. The German Government owns 34% of Areva NP through Siemans. Areva NP, a subsidiary of industry giant Areva, has the contract to build France's new nuclear reactor.
Officially, US businesses are out of Sudan. However, a company called Jarch Capital, based in New York City (on the 9th floor at 445 Park Avenue), bought a Block B concession back in 2003 from the SPLM/A before the 2005 peace agreement was signed. Jarch Capital is owned and chaired by an American named Phil Heilberg, also owner of Heilberg Management Group. He is also the manager of AIG's Hong Kong office. AIG, an insurance giant, has an African Infrastructure Fund. Don't be surprised if South Sudan will be a large recipient in the future after independence.
Back in 2003, before the North-South peace deal was signed, the legality could be debated because South Sudan did not have semi-autonomous status and any sovereignty they had was de facto. So due to sanctions, Mr. Heilberg could not do business in Sudan. However, he had a novel solution. He helped create Jarch Management Group LLC, of which he became Chairman. Jarch Management (JMG) was registered in the Virgin Islands:
24 De Castro Street
Wickhams Cay I
Road Town, Tortola
British Virgin Islands
As a result, since it was technically not an American company even though an American owned and ran it because it is not registered as a corporation on American soil. It is a time-honored trick, and as result, there are no problems doing business in Sudan, even with the de facto SPLM government, because such restrictions do not exist for British Virgin Island businesses. JMG would eventually buy the Block B concession from Jarch Capital. According to Jarch's management team the following individuals were aware of the original deal made in 2003: Dr John Garang (late leader of SPLM), Rebecca Garang (Minister of Transport and Roads for GOSS), Dr. Riek Machar (Vice President of GOSS), Kuol Mangyang Juuk (Minister of Transport GONU and board member of White Nile, Ltd.), Arthur Akuien Chol (Minister of Finance and Economic Planning of GOSS), Dr. Lual A. Deng (State Minister of State for Finance of GONU and non-executive board member of White Nile, Ltd.), Steven Wondu (North American representative).
As of 2006 JMG's Advisory Board included:
1. Mr. Saville Lau- Chairman of the Board of Advisers for Jarch Management Group and President of Jarch Management Group. Mr Lau is located in Hong Kong
2. Dr. David de Chand- Chairman of the South Sudan United Democratic Alliance (SSUDA) and Professor at the University of Nebraska. Dr. Chand is located in Omaha and is an expert on Sudan.
3. Dr. Amir Idris- Professor at Fordham University. Dr. Idris is located in New York and is an expert on the African region.
4. Commander Thowath Pal Chay- Chairman of Ethiopian Unity Patriots' Front (EUPF) and Commander in Chief of Ethiopian Unity Patriots' Army (EUPA). He is located in East Africa. This individual, who has called for an overthrow of the Tigray government in Ethiopia, cannot sit well with the US, a staunch ally of Ethiopia.
5. Mr. Peter Kueth Kor- Secretary for External Relations for the South Sudan Defence Forces (SSDF). He is located in Nairobi, Kenya.
One will notice the preponderance of members of the Sudanese Diaspora residing in the United States.
Note that Mr. De Chand was sacked in October 2006.
The SPLM, who has been backed by the US since their creation, gave Block B to White Nile, disregarding the previous deal with Jarch made back in 2003. Jarch threatened to sue the SPLM. They also forged ties with the South Sudan Defense Force (SSDF), who are primarily Nuer but are comprised of several groups that split off from the SPLM/A during the north-south war. The SSDF and the SPLA fought in the late 1990s until 2006. The SSDF has also allied with the Government of Sudan in the past. The SSDF and its political wing issued an exploration license to JMG in late February 2006. They said they would consider declaring their own independence and split South Sudan in two if JMG was not respected as the sole authority. However, on 27 February 2006, just 2 days after this announcement, the US said it wanted to build a military base in South Sudan to protect the oil. The SSDF's Brig Mohamed Chol al-Ahmar warned the Government of South Sudan (GOSS) not to approve it. In December 2006, JMG threw its support behind General Matip, angering some southern factions and causing tensions.
JMG sought to use the existing pipeline going to Port Sudan as a means of transport, but the Ministry of Energy in Khartoum refused to strike a deal. JMG and the SSDF were left to look for an alternative. While this situation has not been resolved yet, I postulate that they may be planning to persuade for an extension of the planned Uganda-Kenya-Rwanda pipeline into South Sudan. The pipeline is set to begin construction in May, but this is contingent on the Kenyan power-sharing agreement holding and peace returning to Kenya of course. Transport for the oil is taken care of. The Germans are financing a new railway line that will up Kenya, Uganda, and South Sudan, allowing for shipping to and from the port city of Mombasa. In addition, both Uganda and Kenya would profit handsomely from the transport fees (customs) and taxes during the shipping process. It would also help develop Uganda's budding petroleum sector, currently being exploited by Heritage Gas and Oil, Tullow Oil, Neptune (Tower) Resources, and Dominion Petroleum.
The reader should realize just how much of a stake the US has in the Kenyan pipeline project. The contract to build, operate, and transfer the oil was awarded to the Uganda-based Tamoil East Africa Ltd. This firm is a subsidiary of Tamoil Africa Holding, based in Libya. In June 2007, US private equity firm Colony Capital LLC bought out the majority shares in Oilinvest and Tamoil Africa Holding (TAC) for 5.4 Billion dollars (US). Colony was founded and is currently run by Mr. Thomas Barrack Jr., the Deputy Undersecretary of the Department of the Interior for President Ronald Reagan. Therefore, the US has the contract to build, operate, and maintain the new pipeline. This is, in part, why the US pushed so hard for the power-sharing deal in Kenya to stop the violence, but at the same time ensuring President Kibaki, whose administration approved the contact, remains in a prominent position of power. In fact, Nexant, a subsidiary of Bechtel, completed the cost-benefit analysis of the pipeline project. It was, in large part, their recommendations that allowed the pipeline extension project to be approved. But there is more. Only months after their acquisition, TAC acquired an exploration licenses in Chad for the Irdiss 1, Idriss 2 and Wadjadou 1 blocks near the Libyan border, the same relative area the US has quietly built a military base in Libyan territory under the guise of the Pan-Sahel Initiative.
At the same time, TAC reportedly received exploration permits from the Moroccan Government to explore in Western Sahara, a disputed territory that is not recognized as a state, making any such exploration highly illegal under international law. Colony Capital spokesman have vigorously denied that they received any such deal in W. Sahara. TAC also has oil concessions in Mail and Niger, where battles with the Tuareg militias have been raging. The US has been training and supplying the Mali and Niger Governments' armies under the Pan-Sahel Initiative. They have even dropped supplies under fire to government troops on the battlefield. The President of Mali visited President Bush in Washington D.C. shortly before he left on his recent official state visit to Africa recently. The natural resources in the area cannot be developed while the Tuareg conflict rages on. The French are interested in the uranium stores in the region as well. Areva, a firm mentioned earlier, owns vast concessions in Niger to mine for Uranium and the EU's planned Trans-Sahara Gas Pipeline from Algeria to Nigeria will go right through Niger.
Uganda needs to procure the land to build the pipeline on, which may be a part of the reason for the ongoing Buganda land ownership debates. They also need peace in North Uganda and South Sudan. Consider this: Why is it now that there is such a political push to get a lasting agreement with the Lord's Resistance Army (LRA)? They are currently in South Sudan around Juba and in the Central African Republic and are destabilizing the area and slowing the development of infrastructure in Northern Uganda, including the border with South Sudan. The US in particular, including President Bush himself, has pushed for a final peace agreement. Why such an aggressive and concerted effort to get this particular armed group to end its insurrection? Why not make put this high-level of pressure on the earlier? After all, the LRA was armed by the Khartoum Government as a way to get back at Uganda for arming the SPLA. All parties with a stake in the project want lasting peace and stability in Uganda so they can develop the land in the northwest and LRA was supported by the Khartoum Government for a long time as a way to get back at Uganda for arming the SPLA.
JMG has not sat idle in the meantime. In January 2007, Jarch Capital named Mr. Joseph Wilson as the Vice Chairman of Jarch Capital. Yes, this is the same Ambassador Joseph Wilson, who has a wife, Mrs. Valerie Plame, that was exposed as a covert Central Intelligence Agency (CIA) agent by Mr. Karl Rove and certain members of the Bush Administration following Ambassador Wilson's revelation that the Niger 'yellowcake' claims make in Pres. Bush's State of the Union address in 2003 were utterly false and the administration knew this when they included the information in the speech. Ambassador Wilson served as the Senior African Affairs Advisor at the National Security Council (NSC) under President Clinton's NSC Advisor Anthony Lake in 1997 during the time period the Khartoum Agreement was signed. Mr. Lake was originally nominated to be the Director of Central Intelligence (DCI), but was rejected by the Republican-controlled Congress. Mr. Wilson rotated into the NSC as Ms. Susan Rice was rotating out of the NSC's African Desk and into the State Department's Bureau of African Affairs. Working under him at the NSC's East African Desk was John Prendergast. Ambassador Wilson was also the chief planner for President Clinton's trip to Africa in 1998.
Ambassador Wilson dealt with the SPLM/A in his capacity as an NSC advisor. In 1997, the north-south civil war was in full swing and was a major issue at the NSC African Desk. He was also a seasoned diplomat who had served in several African countries, including as the Ambassador to Gabon and Sao Tome and Principe. His negotiating skills and knowledge of the region were incredibly valuable to Jarch and it did not take long for them to pay off. White Nile's legal claim to Block B was rejected by a decision adopted by the Sudanese National Petroleum Commission on 17 June 2007. In August 2007, President Salva Kiir and General Matip confirmed JMG's 2003 agreement claims in exchange for 10% following months of meetings. In order to gain full political support for their claims, JMG began appointing members of the SPLM/A to its advisory board. In November 2007, General Matip was appointed as an Advisor and Vice President. At the same time, in an official company release, JMG urged GOSS to declare South Sudan's independence. In late February 2008, Joseph Wejang, the Minister of Health of the Government of Southern Sudan also joined JMG's advisory team as did Ambassador Emmanuel Touaboy, the Ambassador of the Central African Republic to the US. With support from both the Dinka and Nuer sides through their diversified advisory board, JMG has strengthened its political position and tempered potential SPLA-SSDF skirmishes over the oil fields. Since JMG is essentially acting as a holding company, it follows to ask: just who are they holding it for? Perhaps they are waiting for South Sudan's independence referendum in 2011 so they can sell it legally to a U.S.-registered oil company. Only time will tell.