Sudan: Oil Money Is Fueling Civil War

BENTIU, Sudan -- Oil built the airport at Heglig, the lavishly
outfitted hospital next door and the new school at Debap. Oil built the
electricity towers stippling the horizon and the tightly packed,
all-weather road that runs across the broad savanna to Bentiu, where a
thatched roof keeps the sun off Veronica Nyabiele. She is 12 months old,
but malnutrition has held her weight to nine pounds.

Oil has a role in that, too.

In a civil war that seems to be fueled by so much -- religion, for
example, because one side is Muslim and the other side is not, and race,
because one side is Arab and the other African -- nothing has supercharged
the fighting in southern Sudan quite like Nile Blend crude.

Large quantities of oil were discovered under south-central Sudan in
the 1970s. Before it was drawn to the surface and piped north two years
ago, the slightly waxy, light-grade petroleum was merely one more token of
the schism between Sudan's ruling north and neglected south, something for
the north to claim and the south to contest.

Today, four oil companies are producing more than 200,000 barrels a day
-- and more firms are exploring other reserves. Export revenue has doubled
the government's defense budget over two years. And a multitude of
eyewitness reports say the new guns are being used to drive tens of
thousands of southerners -- like Veronica and her family -- off their land
to secure the oil underneath.

"The fighting follows the oil," said John Ryle, an independent
investigator who recently released a report that documented a broad
government effort to clear the petroleum concessions, sometimes using
helicopter gunships stationed at oil-field airports.

"I wouldn't use the term 'scorched earth,' which implies a kind of
systematic campaign," Ryle said. "But they are burning and attacking
villages."

Such tactics are nothing new in Sudan's civil war, which has raged for
18 years. Government troops and allied militias have been fighting rebel
groups seeking autonomy for the country's southern provinces. Human rights
groups and aid workers say the government has razed villages, bombed
hospitals and churches and supported the militias' abduction of southerners
as slaves. The rebels have been accused of similar atrocities on a lesser
scale.

But the presence of oil has brought the fighting to new areas, where it
drives local people out of the countryside and into government-held
garrisons such as Bentiu. Once it was a town of 15,000; now its population
can triple or quadruple depending on the intensity of fighting nearby. A
handful of U.N. and private agencies stand by with food and medical care.
The worst cases end up, like Veronica, as stick figures in the therapeutic
feeding center run by Action Against Hunger, an international charity.

"They all say the same thing," an aid worker said. "People came and
destroyed their homes and they had to flee."

The situation has further stoked Western outrage over the Sudanese
government's human rights record. While no American companies are involved
-- U.S. law prohibits them from doing business in Sudan -- the involvement
of Canadian and European firms in extracting Sudanese oil has prompted
"disinvestment" campaigns like those directed against firms that did
business with apartheid-era South Africa.

"These are war crimes," said Eric Reeves, a Smith College professor who
works against companies doing business in Sudan.

The criticism has fallen hardest on Talisman Energy Inc., a
Calgary-based firm that was little known outside Canada until it bought a
25 percent stake in Sudan's most promising oil field. The Muglad basin is
classic geography for oil, a sedimentary plain exposed by two plates being
pulled apart. Unfortunately, the same area roughly defines the boundary
between Sudan's north and south.

Except on maps, the country's two halves have never become one. The
Muslim Arabs of the arid north historically preyed on the Africans who live
in the wetter south and practice Christianity or traditional beliefs.
British colonialists actually separated the two. National independence in
1956 was quickly followed by a sporadic war for southern secession. And
although the fighting was in abeyance when Chevron Corp., the U.S. oil
company, sank wells north of Bentiu in 1978, the discovery of oil helped
renew the conflict in 1983.

"It is a problem of uneven distribution of resources and power," said
Alfred Taban, a southerner who publishes the independent Khartoum Monitor.
"The northerners have taken up all the ground."

Chevron pulled out in 1984, after rebels killed three of its employees.
The oil fields stood largely idle until 1997, when the Sudanese government
made peace with some of the rebel factions and formed a consortium to renew
exploration. The partners included the China National Petroleum Corp., the
Malaysian national oil company Petronas and Sudan's own Sudapet Ltd. But
Talisman was the show horse.

Not only did the company bring technical expertise to build a 900-mile
pipeline from the Heglig oil field to Port Sudan on the Red Sea, it also
carried the stature of a Western oil firm, credentials craved by the
government, which spent much of the 1990s under U.N. and U.S. sanctions
because of its support of terrorism.

"My ultimate goal is to be the biggest oil exporter in the world," said
Awad Jaz, Sudan's energy minister. Jaz has said any U.S. oil company could
expect favorable terms if the sanctions were lifted.

But Western diplomats say U.S. firms are not lobbying hard to join
Talisman and share its image problem. Reeves boasts that the divestment
campaign has cost the company every one of its public institutional
investors, from the City of New York to the Texas teachers' pension fund.

Campaigners are now pressing Fidelity Investments to divest, as well as
pushing to ban oil concerns doing business in Sudan from being listed on
U.S. stock exchanges.

Talisman has hired a Sudanese seminary student to buff its image and
formed an office of corporate responsibility that points out that the oil
areas have an infrastructure unique in this strikingly poor country of 30
million people: new water wells, schools, clinics and the Heglig hospital,
extraordinarily well-equipped for rural Africa, complete with operating
room and neonatal unit.

"It's kinda neat," said Helmut Gutsche, Talisman's field production
manager at Heglig, where foreign employees fly in for 28-day shifts, eating
and sleeping in a tidy camp of steel trailers. "There's poverty, on the
downside. On the upside, we're trying to improve things."

Talisman also bought satellite photos to try to prove that its oil
fields have always been largely vacant, but students of the Sudan war have
long watched the fighting overlap with the oil concessions. And, though
Talisman's lightly populated operation areas were first cleared perhaps two
decades ago, Ryle and a Canadian researcher documented recent helicopter
attacks near its fields. They also found deserting soldiers who said their
mission was to drive people away from the oil fields.

"It's kind of a raggedy system of harassment, but it does seem to be
classic counterinsurgency," Ryle said. "You're trying to get people to come
into the towns so you can keep an eye on them, or drive them farther into
the swamps."

Today, however, most of the fighting is farther south, nearer a
concession leased to Lundin Oil, a Swedish company. Local residents were
driven out over the past two years, largely through surrogates: The
Sudanese government arms one southern militia, which raids the area,
looting along the way.

Still farther south, a much larger bloc has long been held by the
French giant TotalFinaElf. In fact, the Sudanese government has chopped
much of the south into oil concessions reaching nearly to the Ugandan
border. Critics see each bloc as another potential battlefield in a war
that has already killed 2 million people.

Sudan's annual take from oil -- perhaps $500 million, a figure that
will climb steeply after investors recover their risk -- has clearly tipped
a stalemated war in the government's favor. The oil fields are new
government garrisons, with soldiers camped every three miles on the main
road, and tanks and helicopters in plain sight around airfields.

And the Sudanese People's Liberation Army, the principal southern rebel
force that declared oil installations a target, has managed only scattered
raids. In January, rebels hit a drilling derrick operated by China's Great
Wall Drilling Co., killing three soldiers in a raid that killed 15 rebels.

"You don't want to be flying around here at night if you don't have
to," said a Canadian pilot who flies the Bell 212 helicopter that ferries
oil workers around the concession.

Whatever it does to the military equation, however, oil shows no signs
of easing the political question at the heart of the war.

"I will say one example," said Thomas Kume, a former governor of the
province adjoining the oil fields and a nominal government ally. "The fact
that the refinery is moved to Khartoum and there's not even a small
refinery in the south -- southerners are bitter about it."

• 107 Energy
• 116 Human Rights