A South Sudan soldier poses in Bor, where fighting has been fierce. Photo: Reuters
Just a few months ago, South Sudan resumed pumping oil after a lengthy and self-imposed hiatus. But now, after violence that led to the death of 16 oil workers, wells are being shut down. It's a reminder that for all of Africa's energy promise, and grandiose dreams of oil-fuelled development, the continent's ability to tap those sources of wealth remains hostage to bad security and governance.
After a week of sporadic fighting around the South Sudanese capital of Juba, and some isolated if horrific violence in oil fields close to the border with Sudan, things took a turn for the worse at the weekend with the capture by rebel troops of the capital of Unity province. That's the epicentre of South Sudan's oil fields, and the starting point for the export pipeline that snakes north through Sudan to the Red Sea.
The surge in fighting spurred US forces into action, with about 150 US marines dispatched Monday to South Sudan to help protect remaining US citizens and the embassy. It's not entirely clear how much of South Sudan's oil production has been affected by the violence. Foreign oil companies, including Chinese and Indians, pulled out their workers and shut down wells in some other oil fields over the weekend. But South Sudanese diplomats said Sunday that oil was still flowing. South Sudan doesn't produce much oil - about 250,000 barrels a day - but oil revenues are essential for both the government in Juba, and for South Sudan's long-time foes in Khartoum.
What makes the threat to Sudanese oil especially painful is that oil production had just resumed after a 15-month hiatus, caused by a dispute with Sudan over how much South Sudan should pay to export its oil through the pipeline on Sudanese territory.
''What you're seeing in the moves around Unity is the question of getting the oil flowing, and keeping it flowing. Obviously both Khartoum and Juba have an interest in that,'' said Peter Pham, the director of the Africa Centre at the Atlantic Council. For now, the forces nominally fighting on behalf of the South Sudanese government in Unity are actually proxies for Khartoum, Pham said. In other words: Sudan is reasserting control over the oil-producing regions it lost when South Sudan became an independent country in 2011.
South Sudan's unrest, and the new threat to its oil production, comes in the context of a wave of production disruptions across Africa and the Middle East that has essentially erased the production gains made in the US and elsewhere. All told, supply disruptions across the globe - including from Iran and Iraq - averaged about nearly 3 million barrels a day in late 2013, 50 per cent more than over the previous few years.
Libya, for instance, has rocketed between a near-total shutdown during its civil war - which took about 1.5 million barrels a day off the global market - to an unexpectedly quick recovery in oil production after the war was over. But that was short-lived: regional tensions left over from the Libyan civil war, including the creation of militias that operate beyond government control, have again conspired to kneecap Libya's oil output.
Nigeria, once the oil powerhouse of southern Africa, has its own security challenges. The long-running battle between international oil companies and the Movement for the Emancipation of the Niger Delta has left a wake of burning refineries, exploded pipelines, and evacuated offshore oil platforms. After a respite, it seems that MEND is again on the warpath. As if that weren't enough, Nigeria also struggles with rampant oil theft. Taken together, Nigeria's security challenges have kept the country's output about 1 million barrels a day lower than it could be.
Supply outages matter for the US, not because it is reliant on Libyan or Nigerian oil, but because they make oil more expensive than it should be. That, in turn, dampens economic growth in the developed world. And because major producers such as Saudi Arabia have to pump nearly full-out in order to make up that shortfall, there is less spare production capacity in the global oil market. That keeps the oil market tighter and tenser, turning relatively small events that could threaten oil supplies into price spikes.
South Sudan's latest troubles hearken back to the Sudanese civil war which began in the 1980s and which also chased away international oil companies. But it's especially important today, simply because the promise of massive oil reserves off the west coast of Africa, as well as in countries such as Kenya and Uganda, have sparked a wave of enthusiasm for Africa's energy future that could well collide with a darker reality.
More oil and gas discoveries have been made in East Africa in the past couple of years than anywhere else, Ernst & Young recently noted. Huge oil finds off the coast of West Africa have fuelled the hopes of Gulf of Guinea countries of a sudden windfall. Oil discoveries in Kenya have that country, and some international firms, dreaming of turning Mombasa into an oil-export hub. Uganda is bullish on its own prospects for oil production after a series of promising wells drilled by British firm Tullow Oil. Africa's oily enthusiasm extends to such unlikely outposts as Ethiopia and Congo.
But turning that oil promise into reality is a daunting challenge, as underscored by the violence in South Sudan over the past week. Security looms largest, because it is a precondition both to develop the oil and build the pipelines, roads, and rail lines the region needs to make energy development a reality. But cronyism, weak laws, poor governance, corruption, and domestic politics can combine to scuttle hopes of a quick energy-fired economic bonanza.
''There is a myth that many oil companies and policymakers subscribe to, which is that economic interests will trump everything else. What gets discounted is that in some places in Africa there is a different calculus. Tribal animosities, personal animosities, political grudges - all those weigh a lot heavier, and there are a lot of people willing to cut off their noses to spite their faces,'' Pham said.