FOCUS: S. Sudan succession prompts White Nile uncertainty
By SIMEON KERR and BENOIT FAUCON
LONDON, Aug 1, 2005 (Dow Jones) — White Nile Ltd. (WNL.LD), which is involved in a controversial oil deal in South Sudan, faces a period of uncertainty following the death of the country’s vice president, but few analysts expect the incident immediately to affect the firm’s contract.
The death in a helicopter crash of VP John Garang, a unifying force who led rebels through a 21-year civil war to sign a power-sharing peace deal with Khartoum in January, has forced the remaining southern leadership to find a successor. This comes just three weeks after Garang was sworn in as VP of the country and leader of the nascent southern autonomous government.
Garang’s longtime deputy, Salva Kiir, was named to succeed him as head of the Sudan People’s Liberation Army and as president of south Sudan, Garang spokesman Yasser Arman told The Associated Press.
Garang’s death could have an impact on the implementation of an oil deal White Nile signed in February with the autonomous southern government because the final approval of the deal is tied up with the peace process.
Garang, leader of theSudanese People’s Liberation Movement, signed a peace agreement in January that ended 21 years of civil war between South Sudan’s Christian and animist rebels and Sudan’s Muslim-dominated government.
One month later, White Nile finalized a deal with the government-in-formation of South Sudan, which awarded it a 60% stake in Block Ba, a 67,000-square-kilometer block that is part of a larger area claimed by French major Total SA (TOT), Marathon Oil (MRO) and the foreign arm of Kuwait Petroleum Corp. (KPT.YY). The remaining 40% is held by Nile Petroleum Corp., the southern government’s national oil company.
Stefan Wolff, a professor at the U.K.’s Bath University specializing in international conflict management, said that while the death shouldn’t immediately affect the oil contracts, it could jeopardize the peace process. “It was Garang who held the SPLM together,” said Wolff. “Now there’s a risk of an intra-SPLM struggle.”
Garang’s death “adds another element of uncertainty into what was already an uncertain situation” regarding the While Nile deal, said Joshua Mandel, a Mideast analyst with Control Risks Group, a security and political risk consultancy.
White Nile shares, which are listed on London’s Alternative Investment Market, lost up to 15% following news of Garang’s death. At 1316 GMT, the stock was trading down 12 pence, or 12%, at 89 pence.
The junior oil company’s cofounder, Phil Edmonds, sent condolences to Garang’s family and the people of Sudan, saying the firm would continue to work to help develop the south’s oil industry and infrastructure. “We are going ahead with our seismic work on the ground,” Edmonds told Dow Jones Newswires.
The soon-to-be-formed National Petroleum Commission will adjudicate on the validity of White Nile’s contract with state-owned Nile Petroleum Corp. for Block Ba, part of the area claimed by Total, Edmonds said.
“The individuals may change, but the format for the commission remains the same,” said Edmonds, noting that the NPC will be numerically tilted toward the SPLM when discussing contracts in areas under the nascent southern government’s control, such as Block Ba.
Total claims the rights to the larger Block B after signing with the central government in December a renewed contract on the acreage it abandoned in the 1980s because of the civil war. The French major says its deal is valid while White Nile’s deal breaks the peace agreement.
The European Union-funded International Crisis Group last month called on Garang to de-register the White Nile deal as it posed a challenge to the peace process.
“We regret the death of John Garang and we hope it won’t hamper the peace process since he was one of the initiators,” a Total spokesman said.
Analysts say the pressing issue now is unity of the former rebel SPLM as it attempts to turn itself into an accountable government.
Earlier Monday, Kiir said in a statement that the former rebel army is committed to the pursuit of the peace process, ordering former members of the SPLM leadership to assemble at an emergency meeting in Garang’s personal base near the border with Kenya.
A U.K.-based SPLM member, who declined to be named, agreed that Garang’s aspirations for peace in the Sudan “will be carried out.”
Garang never made public his opinion about the controversial deal with White Nile, but his senior lieutenants have publicly backed the venture.
Kiir, a senior military commander when the southern rebellion erupted against Khartoum in 1983, is close to White Nile founder Andrew Groves.
“He’s 100% behind the deal,” Groves told Dow Jones Newswires.
The next two senior officials, Riak Machar and James Wani Igga, have also backed the deal.