China must recognize referendum result to retain oil assets – south Sudan’s minister

August 20, 2010 (KHARTOUM) – The only way for China to retain its millions-worth of oil assets in Sudan is to cultivate a “strong” relationship with the semi-autonomous region of south Sudan and recognize the outcome of a referendum due in January 2011 on the region’s possible independence, south Sudan official said in statements to Blomberg.

South Sudan, whose population mostly follows Christianity and traditional beliefs, is due to hold a referendum in January 2011 to decide whether to remain united with the Arab-dominated north Sudan or secede to form the world’s newest nation. The region has been enjoying autonomous rule since 2005 when north and south Sudan signed a peace deal that ended decades of civil war fueled by ethnicity, religion and coveted natural resources.

Most of Sudan’s estimated 6 billion barrels of oil reserves lies along the tentative borders between the north and the south. The country currently produces 470,000 barrels of crude oil per day of which Chinese companies are the biggest explorers and receivers.

Anne Itto, south Sudan’s minister of agriculture, told reporters yesterday in the region’s capital Juba upon returning from China that the Chinese government fears that its assets in Sudan’s oil would be “a waster” if the south opts for secession.

“A lot of wild rumors have been getting to them, that if the south separates, there will be insecurity, and if there is insecurity, their assets worth billions of dollars in the form of pipelines and so on will have been a waste,” she said.

Itto, who is also the deputy secretary-general of the SPLM, the ruling party in south Sudan, said that she had told Chinese officials that “if they want to protect their assets, the only way is to develop a very strong relationship with the government of Southern Sudan, respect the outcome of the referendum, and then we will be doing business.”

The minister said that China was interested in expanding oil exploration to more blocks. She further announced that a senior delegation from the Chinese Communist Party would visit the region in early October to try to “bridge the gap.”

Expressing admiration for China’s model of providing development for growing economies, Itto said “whether anybody likes it or not, China is providing leadership in the development of developing countries,” adding that the Chinese are “stepping up. They are funding, particularly in the area of agriculture and exploration of natural resources.”

On August 19, 2010, Sudan signed a $30 million deal with small Finnish company Fenno Caledonian to explore Block 10 in the north east of the country. Sudan says it hopes to produce 600,000 barrels per day by 2011.

(ST)