Oil proving to be a slippery challenge for Juba and Khartoum - CNBC Africa

Oil proving to be a slippery challenge for Juba and Khartoum

East Africa

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First it was the aerial bombings of the Nubia in South Kordafan…

Then, South Sudan's President Salva Kiir accused his officials of stealing at least $4bn from state resources.

Then the South shut down all oil productions for 16 months basically accusing Sudan of stealing $815 million worth of the South’s oil.

Now once again that fragile resource is back in the spotlight…

The South needs US energy companies to assist it to turn the oil industry around

The South Sudanese government in June announced Japanese companies would help construct an oil pipeline through Kenya to help with oil exports.

When the South separated from the North it maintained control over the export infrastructure.

Sudan broke new ground when it shipped its first oil cargo through Sudan to international markets at the end of June.

But a few weeks ago Sudan ordered oil transfers through its territory from its Southern counterpart to be stopped. Sudan’s President Omar al-Bashir yet again blew his trumpet, accusing South Sudan of continuingly supporting Sudan’s Revolutionary Front. These rebels, have in recent months been exchanging fire with the Sudanese army in at least three regions, occupying the town of Abu Kershola before it was recaptured by the army.

It’s no secret that Sudan's President Al-Bashir and the South’s leader Salva Kirr have been at loggerheads for many years, occasionally reported to have thrown insults at each other.

But set everything aside, oil is a vital resource for both countries’ economies.

In 2011 the World Bank put Sudan’s GDP at $64.05 billion with a 4.7% growth rate.

Statics show that by October 2012 that number went down 0.4%.

Sudan has a struggling fiscal gap, a deteriorating exchange rate, external debt and due to US sanctions, lacks access to international financing.

The oil importing country lost 75% of its oil reserves after parting from the south,  where things don’t look greener either.

The Gross Domestic Product in South Sudan was worth $21.12 billion in 2011 but that number reduced dramatically by 27% as a result of the shutdown of the oil pipelines last year.

South Sudan President Salva Kiir says that this time he will refer oil arguments with neighbouring Sudan to the African Union and has vowed not to take the country back to war.

For Africa’s 55th nation around 80% of its GDP is from oil exports. Outside of this lies low productivity, unpaid agriculture and pastoral work that accounts for around 15%.

Inflation stood at 47.8% the country, driving up prices for its citizens.

Oil wars between the two parties don’t make sense when no one is winning.

Despite the South's independence in 2011, tensions over oil continue

May I add that oil rich Abeyi still needs a referendum to decide which Sudan it wants to be a part of…and a solution is needed for poor neglected Darfur.

Bearing in mind all the ethnic differences, all rebels in both counties need to be disarmed. It’s time for Juba and Khartoum to work together for the benefit of all.

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