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China to Send Envoy to Mediate in Sudan Oil Row

Source: Reuters 12/5/2011, Location: Africa

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China is to send an envoy to seek a compromise between Sudan and South Sudan over a fees dispute threatening oil supplies from the two recently separated countries, which are big crude suppliers to the big Asian economy. Chinese Foreign Ministry spokesman Hong Lei said his government's special envoy on African affairs, Liu Guijin, would "in coming days visit north and south Sudan to make efforts at mediation and conciliation".

The move shows the big stake Beijing has in preserving stability between Sudan in the north and South Sudan, which seceded in July, taking some three-quarters of the formerly united country's 500,000 barrels per day of oil production. "China voices its concern over the recent tensions between north and south Sudan, especially at the lack of progress in negotiations over the issues related to oil," Hong told a daily briefing. "We hope that both sides will exercise calm and restraint, and appropriately settle their differences through consultations and negotiations," said Hong.

China has sought to maintain good ties with both countries since South Sudan declared independence from its larger and long-dominant northern neighbour, the culmination of a 2005 peace deal that ended what was one of Africa's longest and deadliest wars. Some two million people died in the conflict. But Beijing's balancing act is being tested by the dispute.

Oil is vital to both Sudan and South Sudan, but they have not agreed on how much the landlocked South, which must send its oil exports through pipelines in Sudan to a port, should pay in transit fees. Sudan last week denied it had halted South Sudan's oil exports in a transit fee row, but said it had confiscated crude shipments to make up for payments it claims South Sudan owes.

South Sudan's oil minister said then that at least one 1-million-barrel cargo of his country's oil was still "detained" at Port Sudan. South Sudanese officials said two shipments had been held up or would be held up because of the decision, including a 600,000 barrel shipment sold to China's Unipec.

In the first ten months of 2011, China's imports of Sudanese crude were up 5.5 percent on the same period a year before, reaching 11.1 million tonnes: about 5 percent of China's total crude oil imports. Analysts have said the fees row is likely to stoke tensions between the two old civil war foes and complicate talks in the Ethiopian capital over a raft of issues related to the secession, including debt and the position of the shared border.

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