South Sudan: UN Accuses Oil Firms of Fuelling Armed Conflict in South Sudan

Soldiers patrol an oil field in Paloug, in South Sudan's Upper Nile state (file photo).

Transnational oil-production companies controlled by Asian interests have been complicit in South Sudan government military offensives that involved killings of civilians.

"There has been a lack of corporate accountability for transnational companies, several of which were conducting profitable business in oil-producing areas at times when mass human rights violations were perpetrated against the local population, and which in various ways were complicit in these crimes," the UN's Commission on Human Rights in South Sudan said in a 212-page report.

The commission points to a US Department of Commerce finding last year that the transnational companies, along with South Sudan's government-run oil firm, have acted as enablers for the country's bloody conflict.

The US stated that these oil entities provide "substantial revenue that, through public corruption, is used to fund the purchase of weapons and other material that undermine the peace, security and stability of South Sudan rather than support the welfare of the South Sudanese people."

That March 2018 Commerce Department announcement served as "a stark reminder that the companies have been found, as a consequence of their business activities, to have caused or contributed to the ongoing armed conflict and the violations against civilians in their areas of operation, risking exposure to potential criminal liability.

Oil firms

After Western oil corporations ceased operations in South Sudan several years ago -- due in part to an outcry in their home countries over oil-related human rights abuses -- a trio of Asian entities took over oil production in the country, the commission notes.

"These companies have led the oil exploration in South Sudan from the moment it gained Independence in July 2011," the UN report says.

It lists the Dar Petroleum Operating Company as currently the largest oil-producing consortium in South Sudan.

This joint venture is owned by the Chinese National Petroleum Company, which holds a 41 per cent share, and by Malaysia's Petronas (40 per cent), as well as by South Sudan's state-run Nilepet oil firm and its subsidiaries (14 per cent).

The Kuwait/Egyptian Tri Ocean company holds a four per cent share in Dar Petroleum.

The Chinese National Petroleum Company also owns a 40 per cent share of the Greater Pioneer Operating Company, which is extracting oil from fields near South Sudan's border with Sudan.

Petronas has a 30 per cent stake in this consortium; India's Oil and Natural Gas Corporation holds a 25 per cent share, while Nilepet accounts for the remaining five per cent.

Sudd Petroleum Operation Company has announced it will soon be developing fields in the former Unity State. This business is jointly owned by Petronas (68 per cent), India's Oil and Natural Gas Corporation (24 per cent) and Nilepet (eight per cent).

Facilities

Transnational oil companies have been accused of repeatedly allowing government forces and their proxies to use the companies' facilities, "in particular, air strips and road infrastructure," the UN commission says.

Andrew Clapham, a commission member, warned at a press conference launching the report that entities involved in oil extraction in South Sudan risk charges of war crimes if they facilitate warring forces.

"There are thousands of civilians who have been forcibly displaced following a scorched-earth policy, in which the parties to the conflict are attacking villages, torching homes, killing civilians and raping women and girls," said Mr Clapham.

"If you are involved in oil extraction in that area and you are asked to assist one side or the other, you could be accused of complicity in war crimes."

Oil is intrinsically linked to the five-year-long conflict because control over the country's foremost source of income is "a top prize in the struggle for political and economic power," noted the UN report.

"The economic and strategic importance of the oil-producing areas in Unity and Upper Nile States has been a major driver for the continuing violence, the ensuing human suffering and the violations of international humanitarian law witnessed there," the commission observed.

Parts of the country with significant oil deposits have been "increasingly militarised by government forces," added the report.

South Sudan's National Security Service has expanded its involvement in Nilepet, the commission said. And the state-run oil firm's operations "have been characterised by a total lack of transparency and independent oversight, allegedly diverting oil revenues into the coffers of elites in the government."

"Nilepet has been used repeatedly by the South Sudanese government as an instrument to finance the ongoing inter-ethnic armed conflict in the country," added report.

No benefits

The vast majority of South Sudanese have reaped no benefits from the country's oil reserves, the third-largest in sub-Saharan Africa.

The World Bank estimated that 82 per cent of the population was living below the international poverty level in the first half of last year.

South Sudan currently produces a modest total of about 150,000 barrels of crude oil per day. The UN commission said 40 per cent of the revenues from the sale of that oil goes to operational costs and 20 per cent flows to the transnational companies involved in the joint ventures. The government gets the remaining 40 per cent.

But the government's net profit from oil extraction is "severely limited" due to a set of payments it is obligated to make to neighbouring Sudan under the terms of their separation agreement, the report points out.

South Sudanese activists have urged the UN commission and the African Union to ensure that oil-related crimes are included in the mandate of a proposed Hybrid Court.

This body, to consist of South Sudanese and international judges, was supposed to become operational by April 2017 under the terms of the 2015 peace agreement among the country's warring forces.

The African Union backs establishment of this war-crimes court but the AU's negotiations with the South Sudan government over the court's composition and authority have been stalemated since December 2017, the UN commission relates.

And even if the Hybrid Court does eventually come into operation, it is "likely to have limited capacity and therefore may not be able to hold to account a large number of perpetrators," the commission's report states.

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