South Sudan entered independence in July 2011 with the advantage of vast oil reserves that could be used to develop its vastly underdeveloped territory. But there was a major catch – the new nation is landlocked and dependent on pipelines and processing facilities in Sudan. It was hoped that mutual dependence on oil revenue would pressure the civil war foes into cooperating. Instead, South Sudan’s first year of independence was marred by disputes over transportation and processing fees, which compounded tensions over contested border areas, some rich in oil.
After accusing Sudan of stealing $815-million worth of its crude, South Sudan took the dramatic step of shutting down production. Sudan claimed it confiscated the oil to make up for unpaid fees, and it sold some at discount on the international market even as the South threatened legal action. I followed the money on some of those deals, including five ships loaded with Southern oil. From Port Sudan, the murky wake led through international waters and netted companies from the British Virgin Islands, Singapore, Egypt, India and Japan. I was first to report that a London court ordered the proceeds from a cargo sold by Trafigura, the world’s largest commodities trader, was to be held in escrow until ownership was established.
The oil wars also pulled state companies from China, Malaysia and India into the fray. They had been the biggest petroleum operators in Sudan, and with the South’s secession found themselves caught between the former foes. China’s economic and political interests in particular became more tenuous as tensions heightened, bringing the Sudans to the brink of all out war in April 2012. In the midst of the turmoil, China was attempting to deepen ties with the South, while maintaining its relationship with Sudan. One scoop illustrated just how precarious that relationship had become: a Sudanese airstrike in South Sudan’s oil-rich Unity state turned up a Chinese-built missile.