Oil Workers Seen as Target in New Phase of South Sudan's War

(Bloomberg) - Crude oil brings in the cash to keep South Sudan’s army fighting. That may have made oil workers a target for rebels waging the African nation’s three-year civil war.

The seizure of six workers, including three foreigners, in the oil-rich north this month is the latest blow for authorities trying to exploit sub-Saharan Africa’s third-biggest reserves. Insurgents, who said they captured the two Indians and a Pakistani during fighting, described such actions as a reminder to foreigners to stay away from oil-production zones. South Sudan’s crude is mainly pumped by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and Oil & Natural Gas Corp. of India.

While kidnappings previously occurred in Sudan, it seems “this violent trend is now moving south as the opposition strives to find ways to undermine the South Sudanese government,” said Luke Patey, a researcher at the Danish Institute for International Studies. “Oil remains the only tangible source of revenue for South Sudan’s government. Even at reduced production levels, the government’s war efforts against opposition forces depend on it.”

Companies that extract oil in Africa’s more restive countries, including sub-Saharan Africa’s two biggest producers, have seen employees become targets before. In Nigeria, militants in the Niger River delta made fortunes in the 2000s ransoming foreign workers. Angola has also seen spates of kidnapping.

Contracting Economy

Oil production in South Sudan, the world’s youngest country, has plunged by at least a third to about 130,000 barrels a day since conflict erupted in December 2013. The decline, combined with a drop in prices, has devastated the economy, with annual inflation reaching almost 500 percent and gross domestic product forecast to shrink more than 10 percent this year, according to the International Monetary Fund.

The war has claimed tens of thousands of lives, with both government forces and rebels accused of atrocities. A famine, described by the United Nations as man-made, has been declared in two northern counties. The Paloch oilfield, the only one still operational, is in the far northeast.

Rebels may “have decided to hit where it hurts the most -- oil installations, assets and workers,” said James Alic Garang, a senior economist at the Ebony Center for Strategic Studies in the South Sudanese capital, Juba. “That is a wicked strategy on their part because it goes a great length to harm the productive potential of the nation.”

The staff seized in March work for Dar Petroleum Operating Co., whose biggest stakeholders are CNPC and Petronas. No one at Dar’s office in Juba was available to comment. The communications department said it would begin considering interview requests April 3.

Disruption Tactic

“The opposition is continuing a tactic of disrupting and dissuading renewed engagement from oil companies in South Sudan,” Patey, who researches the industry at the Copenhagen-based DIIS, said by email.

Petroleum Minister Ezekiel Lul Gatkuoth said plans to boost output won’t be affected and the government will provide “maximum” safety. “The loopholes that made this happen have been filled,” he told reporters March 21.

Representatives of the main rebel group, the Sudan People’s Liberation Army in Opposition, or SPLA-IO, who are based outside the country denied the group has a policy of kidnapping foreigners, even after insurgents seized workers in areas where they said fighting occurred.

“The government is putting these people in harm’s way knowing that it is untenable for them to work there,” Mabior Garang Mabior, a rebel spokesman, said by phone from a location in Tanzania he wouldn’t disclose. The SPLA-IO has warned “companies that they shouldn’t be dealing with the government of South Sudan, that they shouldn’t be operating there, and there is war,” he said.

Pakistan’s ambassador to four East African countries including South Sudan, Asghar Ali Golo, and India’s top diplomat in South Sudan, Srikumar Menon, both said by phone that representatives of the International Committee of the Red Cross visited the three foreign workers in captivity about a week ago.

Following Case

A Red Cross spokeswoman, Alyona Synenko, said the organization is following up on the case but won’t comment further. Presidential spokesman Ateny Wek Ateny said there was no further information on the South Sudanese citizens who were seized.

The Pakistani national, Ayaz Hussain Jamali, was captured March 18 at Gumry oilfield by gunmen who “killed the South Sudanese guard,” Jamali’s cousin, Zakir Bullo, said by phone from New York, citing information he said he received from Dar Petroleum. Golo and Menon said so far they’ve only been in contact with South Sudan’s government and that rebels haven’t made any ransom demands.

The insurgents will probably continue using “kidnapping as an operational tactic” to forward their political agendas, said Nicole Elliott, special risks analyst at red24, a crisis-management company in Johannesburg.

To contact the reporters on this story: Okech Francis in Juba at fokech@bloomberg.net ;Nizar Manek in Addis Ababa at nmanek2@bloomberg.net To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Michael Gunn, Paul Richardson