- Associated Press - Wednesday, December 29, 2010

PALOICH, Sudan | The pipelines run through the north. Most of the oil is in the south. That may explain why Akuoc Ten Diing and five other Southern Sudanese officials were treated to a 10-day, all-expense paid tour of China’s domestic oil industry this fall.

They were guided by female interpreters and dined on lavish meals. “They wanted to make new relations with us,” Mr. Diing said. “Before they were dealing directly with Khartoum.”

Southern Sudan holds an independence referendum in January that is likely to see Africa’s largest country split in two. The oil in the south, which has been controlled from the northern capital of Khartoum, will instead be controlled by the southern capital of Juba.

China looks to be straddling the middle, and has been seeking strong relations with officials in both Sudan’s north and south.

The Petrodar plant in Paloich, a town in middle Sudan near the north-south border, is an array of silver water tanks, towering rigs, and high-tension power lines where Chinese supervisors and Sudanese laborers wear bright red and blue uniforms.

Southern Sudanese security forces wait outside the control room of the Petrodar oil facility in Paloich, southern Sudan. Sudan's oil industry may soon see a major shake-up. Southern Sudan holds an independence referendum in January that is likely to see the creation of the world's newest country. (Associated Press)
Southern Sudanese security forces wait outside the control room of the Petrodar ... more >

The expanse of technology seems out of place in this sun-scorched part of Upper Nile state, an oil-rich but impoverished region where locals live in mud huts.

Sudan is sub-Saharan Africa’s third-largest oil producer, behind Nigeria and Angola. It produced 490,000 barrels of oil a day last year, a 50 percent increase from 2006.

China’s interest here is high. The China Petroleum Corp. owns 41 percent of Petrodar, and a second Chinese company owns 6 percent. Sudan’s government owns 8 percent.

Oil is big money in Southern Sudan, which stands to rake in $4.4 billion in oil revenues in 2010. That’s almost 98 percent of the region’s revenues. The government will bring in only $100 million through other sources.

The oil industry is seen as a potential flash point between the north and south, but it also may serve to tie the two together.

Earlier this month, the ministers for oil and defense from both north and south met in Sudan’s oil-producing middle and agreed that joint security forces will guard installations before and after the Jan. 9 referendum.

The fact that oil companies like Petrodar paid billions of dollars to start exporting southern oil through a nearly 900-mile pipeline to north Sudan’s Red Sea port means that these Khartoum-friendly companies will continue to have leverage over the south’s main source of revenue, according to the European Coalition of Oil in Sudan.

But China has acted wisely in its relations with both north and south since the two ended a civil war in 2005, said oil expert Dan Large, research director at the School of Oriental and African Studies’ Africa-Asia Center in London.

The Chinese government has essentially refashioned its bilaterial ties with Sudan “into triangular relations between Beijing, Khartoum and now Juba so that it now has independent, if overlapping, relations with both,” Mr. Large said.

The Chinese Consul General in Juba, Li Zhiguo, told the Associated Press that the shared interests of Khartoum and Juba in building two cooperative states after southern secession makes Beijing certain that they can maintain close ties with both governments.

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