China depends on rogue state Sudan to help fill its growing appetite for oil. In exchange, it supplies arms and diplomatic cover for a government involved in a civil war that has killed more than 2 million people.
LEAL, Sudan — On this parched and dusty African plain, China’s largest energy company is pumping crude oil, sending it 1,000 miles upcountry through a Chinese-made pipeline to the Red Sea, where tankers wait to ferry it to China’s industrial cities. Chinese laborers based in a camp of prefabricated sheds work the wells and lay highways across the flats to make way for heavy machinery.
Only seven miles south, the rebel army that controls much of southern Sudan marches troops through this sun-baked town of mud huts. For years, the rebels have attacked oil installations, seeking to deprive the Sudan government of the wherewithal to pursue a civil war that has killed more than 2 million people and displaced 4 million from their homes over the past two decades.
But the Chinese laborers are protected: They work under the vigilant gaze of Sudanese government troops armed largely with Chinese-made weapons — a partnership of the world’s fastest-growing oil consumer with a pariah state accused of fostering genocide in its western Darfur region.
A changing nation
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China’s transformation from an insular, agrarian society into a key force in the global economy has spawned a voracious appetite for raw materials, sending its companies to distant points of the globe in pursuit — sometimes to lands shunned by the rest of the world as rogue states. China’s relationship with Sudan has become particularly deep, demonstrating that China’s commercial relations are intensifying human-rights concerns outside its borders while beginning to clash with U.S. policies and interests.
Sudan is China’s largest overseas oil project. China is Sudan’s largest supplier of arms, according to a former Sudan government minister. Chinese-made tanks, fighter planes, bombers, helicopters, machine guns and rocket-propelled grenades have intensified Sudan’s 2-decade-old north-south civil war. A cease-fire is in effect, and a peace agreement is scheduled to be signed. However, fighting in Sudan’s Darfur region rages on, as government-backed Arab militias push African tribes off their land.
China in October signed a $70 billion oil deal with Iran, and the evolving ties between those two countries could complicate U.S. efforts to isolate Iran diplomatically or pressure it to give up its ambitions for nuclear weapons. China is also pursuing oil in Angola.
In the case of Sudan, Africa’s largest country, China is in a lucrative partnership that delivers billions of dollars in investment, oil revenue and weapons — as well as diplomatic protection — to a government accused by the United States of genocide in Darfur and cited by human-rights groups for systematically massacring civilians and chasing them off ancestral lands to clear oil-producing areas. The country once gave safe haven to Osama bin Laden, and the United States lists it as a state supporter of terrorism. U.S. companies are prohibited from investing there.
Part of a broader push to expand trade and influence across the African continent, China’s relationship with Sudan also demonstrates the intensity of China’s quest for energy security and its willingness to do business wherever it must to lock up oil.
From Kazakhstan to the Middle East, past pursuits have ended in failure as Chinese firms have been aced out by the multinational titans that dominate the energy business. Japan appears set to claim Siberian stocks that China once thought were in hand. The U.S.-led war in Iraq has thrown Chinese oil concessions in that country into doubt.
The pressure to find new sources of oil has grown as China has swelled into the world’s second-largest consumer and as production at the largest of its domestic fields is declining. According to government statistics, China’s imports have grown from about 6 percent of its oil needs a decade ago to roughly one-third today and are forecast to rise to 60 percent by 2020.
“China confronts foreign competition,” said Chen Fengying, an expert at the China Contemporary International Relations Institute, which is based in Beijing and affiliated with the state security system. “Chinese companies must go places for oil where American [and] European companies are not present. Sudan represents this strategy put into practice.”
China National Petroleum owns 40 percent — the largest single share — of Greater Nile Petroleum Operating Co., a consortium that dominates Sudan’s oil fields in partnership with the national energy company and firms from Malaysia and India.
Diplomatic aid, too
From its seat on the United Nations Security Council, China has been Sudan’s chief diplomatic ally. In recent months, the council has neared votes on a series of resolutions aimed at pressuring Sudan’s predominantly Arab government to protect the African tribes under attack in Darfur and stop support for militias by threatening to sanction its oil sales. China has threatened to veto such actions while watering down the threat of oil sanctions.
“China has a long tradition of friendly relations with Sudan,” said Wang Guangya, China’s ambassador to the U.N. He confirmed China’s veto threats, though he dismissed as “categorically wrong” suggestions that oil interests were a factor, asserting that the resolutions would have eliminated the Sudan government’s incentive to cooperate. China — itself often criticized on human-rights issues — has a philosophical predisposition against outside pressure.
But Chinese diplomatic experts say oil interests clearly played a role in Beijing’s actions at the United Nations.
“Oil from Sudan makes up one-tenth of all of China’s imported oil,” said Zhu Weilie, director of Middle East and North African Studies at Shanghai International Studies University, who has links with the Foreign Affairs Ministry. “If we lose this source, how can we find another market to replace it? China has to balance its interests.”
Sudan is not a member of the Organization of Petroleum Exporting Countries, but it was granted observer status in August 2001, a sign it is being recognized as a significant oil producer. Its proven reserves are 563 million barrels, double what they were three years ago.
Sudan’s Energy and Mining Minister Awad Ahmed Jaz praised his Chinese partners for sticking to trade issues.
“Chinese are very nice”
“The Chinese are very nice,” he said. “They don’t have anything to do with any politics or problems. Things move smoothly, successfully. They are very hard workers looking for business, not politics.”
Human-rights advocates and opponents of the Sudanese government portray China’s role in different terms: Just as colonial powers once supplied African chieftains the military means to maintain control as they extracted natural resources, China is propping up a rogue regime to get what it needs.
“The Chinese calculation is to consolidate and expand while Sudan is still a pariah state,” said John Ryle, chairman of the Rift Valley Institute, a Nairobi-based research group that focuses on East Africa.
One of the poorest countries in the world, Sudan has long aimed to extract oil riches but lacked the necessary capital. It needed the help of deep-pocketed outsiders. In the 1960s and 1970s, Chevron took the lead. But as the civil war flared in the south in the 1980s, Chevron abandoned its concessions. During the early 1990s, the Canadian firm Arakis Energy took up the task, later selling out to a larger Canadian company, Talisman Energy.
China National Petroleum, still owned by the Communist Party government, bought into the Sudan consortium in 1996. It joined with Sudan’s Energy Ministry to build the country’s largest refinery, then last year invested in a $300 million expansion that nearly doubled production, according to a report in the Shenzhen Business Post.
The consortium’s Heglig and Unity oil fields now produce 350,000 barrels per day, according to the U.S. Energy Department. Separately, China Petroleum owns most of a field in southern Darfur, which began trial production this year, and 41 percent of a field in the Melut Basin, which is expected to produce as much as 300,000 barrels per day by the end of 2006.
Another Chinese firm, Sinopec, is erecting a pipeline from that complex to Port Sudan on the Red Sea, where China’s Petroleum Engineering Construction Group is building a tanker terminal.
Sudan’s bloody north-south conflict began long before China arrived, but oil has dramatically increased the stakes as well as the government’s ability to pursue the battle. The war is a struggle over the resources of the south, pitting the mostly Muslim, Arab elite that runs the government in Khartoum against the largely Christian and animist African tribes who live in the lower half of the country.
A source of arms
For years, the government lacked the arms to vanquish the Sudan People’s Liberation Army, the rebel group that controls much of the south. With the dawn of oil production in 1999, Sudan’s government began collecting $500 million a year in revenue. About 80 percent went to buy weapons, said Lam Akol, who was Sudan’s transportation minister from 1998 to 2002 and is now a rebel commander.
Over the same period, Sudan’s military budget has doubled, according to the International Monetary Fund. A study by PFC Strategic Studies concluded that the Sudan government could collect as much as $30 billion in total oil revenue by 2012, with the potential for much more if exploration succeeds.
As the oil began to flow, Sudan relied on Chinese assistance to set up three weapons factories near Khartoum, said Ryle of the Rift Valley Institute.
Human-rights groups say oil receipts have helped pay for a government-led scorched-earth campaign to remove mostly ethnic Nuer and Dinka tribes from around the oil installations. The goal is to deprive the rebels of a base of support in their bid to attack the industry and undermine the government’s oil revenue.
A report by the U.S.-financed Civilian Protection Monitoring Team, which investigates attacks in southern Sudan, asserted that government troops have “sought to clear the way for oil exploration and to create a cordon sanitaire around the oil fields.”
Correspondents Emily Wax in Khartoum, Colum Lynch in New York and special correspondent Jason Cai in Shanghai contributed to this report.