South Sudan: Lundin's South Sudan Ties Hit South African Shores

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Lundin Petroleum logo.
analysis

Lundin Group, a group of natural resource companies that includes a Swedish oil company facing allegations of aiding and abetting war crimes and crimes against humanity in South Sudan, has an interest in the recently announced discovery of gas off the coast near Mossel Bay in South Africa.

The Swedish Prosecution Authority concluded its nine-year investigation into Lundin Petroleum in October last year, announcing that it intends to indict chief executive Alex Schneiter and chairperson Ian Lundin.

The pair face life sentences if convicted, although both deny the allegations.

Lundin Petroleum spokesperson Robert Eriksson said the preliminary investigation by the Swedish prosecutor is now in its ninth year, “which is a very long time for any investigation” and “no charges have been brought”.

“Despite our frustration over the credibility of this lengthy process, we remain convinced that there are absolutely no grounds for any allegations of wrongdoing against any representative of Lundin,” said Eriksson. “We strongly believe that Lundin was a force for development in Sudan and did everything in its power to advocate for peace by peaceful means.”

A final decision about prosecution, not yet made by Swedish prosecutors, will decide if charges are filed. One report puts Lundin’s profits from the sale of its share in the Sudanese block at $92.6 million.

The case would mark the first time that a multibillion-dollar company is indicted for complicity in international crimes since the Nuremberg trials after World War II.

Lundin Group’s SA connections

The Lundin family has been involved in mining since 1971 and today through a host of companies mines metals, diamonds, oil and gas in 25 countries. One of its latest acquisitions is a 4.9% stake in the major gas condensate find off the coast of South Africa, in Block 11B/12B of the Outeniqua Basin.

The consortium that announced the gas find is made up of France’s Total (45%), Qatar Petroleum (25%), Canadian National Resources International (20%) and Main Street 1549 (10%).

Main Street is held by two companies, Phuthuma Nhleko’s Arostyle Investments (51%) and Africa Energy (49%), which counts the Lundin family as a shareholder and has Ian Lundin’s nephew, Adam Lundin, as a director.

Africa Oil Corp (AOC), which is Africa Energy’s largest shareholder with a 34.6% stake, also counts the Lundin family as a shareholder.

A press release from AOC dated 25 December 2018 announced that it had upped its shareholding in UK junior oil company Impact Oil and Gas Limited to 30% with a further US$20.5 million investment. The press release goes on to state that the funds provided by AOC to Impact are to be used by Impact as a loan to Arostyle Investments to allow Main Street 1549 to acquire its 5.1% stake in the South African gas find. AOC’s president and chief executive Keith Hill sits on the board of Impact Oil & Gas.

Lundin Petroleum spokesperson Robert Eriksson said there was no connection between Lundin Petroleum and Africa Energy, apart from the Lundin family having a minority ownership in both companies.

“The individuals being investigated in Sweden are not in any way connected to Africa Energy,” he said.

Eriksson said that AOC’s only relationship to Lundin Petroleum was that Lundin family was a minority shareholder.

When asked why he was listed as a media contact for both Lundin Petroleum and Africa Energy Corp, Eriksson said he was a “shared” media resource for “several companies with minority ownership of the Lundin family”.

New Frame requested comment from Nhleko and Africa Energy Corp, but none was forthcoming.

An Impact Oil & Gas spokesperson said the company had no comment.

Allegations of war crimes

In February 1997, the Lundin Group signed an agreement for exploration and production rights in Block 5A in Southern Sudan.

A Lundin subsidiary, IPC, was head of the consortium set up to explore the 5A oil field with 40.4%. Malaysia’s Petronas Carigali Overseas (26.1%), Austria’s OMV (Sudan) Exploration (26.1%) and Sudan’s Sudapet (5%) made up the rest of the consortium.

The allegations against the Lundin consortium relate to infrastructure. Specifically, it worked on a road and a refurbished airstrip in collaboration with the Sudanese military, which allowed “systematic attacks” on villages that have been described as “an orgy of raiding and looting”.

These allegations were the subject of a 2010 report titled Unpaid Debt by European Coalition on Oil in Sudan (Ecos), a group of non-governmental organisations (NGOs).

The report says this area of Southern Sudan attracted little military activity before the arrival of the Lundin Group. But reports from NGOs and human rights organisations in the region at the time show that after 1997, the oil operations south of the Bahr el Ghazal River “became the centre stage of Sudan’s civil war”.

In 2010, Ecos said the consortium’s commercial oil exploitation in Block 5A was the “motivation” for the government of Sudan and other militia to commit the crimes that had been reported.

“In addition, Ecos believes that there are grounds to investigate whether the Lundin consortium provided logistical assistance or directly or indirectly financed 
the Sudan Armed Forces and allied armed groups,” says the report.

It estimates that as a result of military action in the region, 12 000 people died, 160 000 were forcibly displaced, often multiple
 times, and 20 000 people were permanently uprooted, having lost 
their cattle and houses.

The Swedish Prosecution Authority initiated its preliminary investigation in June 2010.

First Sudan offensive

Just over two months after the Lundin Group concluded its deal for Block 5A, the South Sudan Independence Movement under Riek Machar and the government of Sudan signed the Khartoum Peace Agreement and the South Sudan Independence Movement was renamed the South Sudan Defence Force (SSDF).

Unpaid Debt says the agreement “enabled the government to present Unity State as a zone of peace under the government of Sudan’s control, even though crucial areas were in reality under the authority of a variety of armed groups ... most of whom were staunch advocates of southern independence”.

Originally called Ryer, the Lundin consortium renamed the area in which it was operating Thar Jath.

The Sudanese government did not intend any peace, says the report, pursuing a military campaign to access and secure the oil fields by violently depopulating the area.

Orders to this effect went out to the Sudanese military as early as six months after the peace agreement was signed and it was done through a proxy, Major General Paulino Matiep, with support from government troops and the air force to keep the SSDF from controlling the oil fields.

“Matiep’s troops moved straight to the consortium’s intended drilling site at Thar Jath and ordered the chiefs in the area to leave with their people or be killed.”

The report details numerous raids and attacks on neighbouring areas – including the torching of homes, fields, schools, clinics and churches – and says most of the violence was directed at civilian populations, not rebel groups.

Second Sudan offensive

In May 1999, the Lundin consortium finished drilling its first well. The SSDF attacked that same month, leading to operations being suspended for 18 months. Unpaid Debt says this marked the beginning of the real battle for control of Block 5A.

By 1999, the Sudanese government was receiving significant oil revenues from other oil fields and this fuelled its offensives in Block 5A with newly purchased large-calibre artillery, helicopter gunships and armoured combat vehicles.

Unpaid Debt says the Sudanese government and oil companies presented the war as a “manifestation of traditional intertribal strife”, despite the fact that it was fought with powerful military weapons.

In 2000, rebel groups opposed the construction of the Lundin consortium’s road from Bentiu to Thar Jath. It was “heavily militarised” yet still plagued by landmines, which killed and injured scores of workers. This opposition to the road resulted in a major offensive from the Sudanese government in March 2000, involving “systematic attacks on the villages along the oil road”.

The year before, the Lundin consortium had refurbished an airstrip at Rubkona, where its base camp was situated. It was also the headquarters of the 15th Division of the Sudan Armed Forces.

From this refurbished airstrip, Antonov planes bombed local villages to scatter people and then government troops would come into the villages by truck and helicopter to “burn huts and kill anyone who had stayed”, says the report.

The same year, the United Nations Commission on Human Rights expressed concern over the “use of oil industry airstrips for military purposes” in the region.

Unpaid Debt says the Lundin consortium’s roads “extended the government of Sudan’s military reach … Without these roads, it would have been impossible to carry out such large military operations.”

Facing increasing media attention in Sweden, Lundin denied all allegations of forced displacement and torched villages along its road.

Third Sudan offensive

The Lundin consortium’s helicopter was shot down in December 2001 and several convoys were brutally attacked in the following month, forcing the company to halt work for 14 months.

Unpaid Debt says then Canadian diplomat Nicholas Coghlan noted that “the pilot of the Lundin-contracted helicopter was known to often transport troops at the government’s request”.

Over the next two years, the Sudanese government launched a final major offensive to control Block 5A and secure the oil industry, and hundreds of thousands of civilians were displaced.

“In all, the depopulated areas formed a wide circle around the operating sites of the Lundin consortium and its access road,” says the Unpaid Debt report. “The displaced could not return to their villages.”

In March 2003, the consortium announced that it was working to recommence activities. But the following month, Lundin announced the sale of its rights in Block 5A and OMV followed suit in September.

Eriksson said that during its time in Sudan, Lundin made infrastructure investments in Block 5A for legitimate operational reasons which also benefited local communities while other investments were made solely to improve the living conditions for local communities.

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