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 You are in: Under Secretary for Political Affairs > Bureau of African Affairs > Releases > Reports > 2003
Sudan Peace Act Report   
Released by the Department of State
April 21, 2003

Section 8

This report is submitted pursuant to Section 8 of the Sudan Peace Act (P.L. 107-245) (“the Act”). It provides:

  1. “A description of the sources and the current status of Sudan’s financing and construction of infrastructure and pipelines for oil exploitation, the effects of such financing and construction on the inhabitants of the regions in which the oil fields are located, and the ability of the Government of Sudan to finance the war in Sudan with the proceeds of the oil exploitation
  2. “A description of the extent to which that financing [referred to in paragraph (1)] was secured in the United States or with involvement of United States citizens”
  3. “The best estimates of the extent of aerial bombardment by the Government of Sudan, including targets, frequency, and best estimates of damage, and
  4. “A description of the extent to which humanitarian relief has been obstructed or manipulated by the Government of Sudan or other forces.

Section 8 (1)
“A description of the sources and the current status of Sudan’s financing and construction of infrastructure and pipelines for oil exploitation, the effects of such financing and construction on the inhabitants of the regions in which the oil fields are located, and the ability of the Government of Sudan to finance the war in Sudan with the proceeds of the oil exploitation”

A. Financing and Construction of Oil Infrastructure and Pipeline

Oil exploration in Sudan began offshore in the Red Sea in the 1950s and 1960s. Chevron undertook significant exploration and development in southern Sudan between 1975 and 1990. In 1990, after Chevron employees came under attack by rebels in the civil war, the company left Sudan under USG advisement. Chevron’s efforts did not produce oil, despite over $1 billion in investment.

With Chevron’s departure, the government of Sudan cancelled Chevron’s contracts citing the company’s failure to adhere to the required development and investment schedule. In 1993, Sudan signed a Production Sharing Agreement with State Petroleum Corporation, a wholly owned subsidiary of Arakis Energy Corporation of Canada. Apparently, Arakis could not leverage the financial resources to develop the region and the agreement stagnated until CNPC and Petronas became involved in 1996.

In March 1997 a new consortium of oil companies, the Greater Nile Petroleum Operating Company (GNPOC), finalized agreements to explore and develop Sudan’s oil Blocks 1a, 2a, and 4 previously identified by Chevron. GNPOC is currently made up of the following members: Chinese National Petroleum Corporation (CNPC), 40%; Petronas of Malaysia, 30%; ONGC Videsh of India, 25% (purchased in March 2003 from Talisman Energy of Canada, Talisman-Energy assumed Arakis Energy Corporation’s stake and operating position when Talisman-Energy purchased Arakis in October 1998, for $771 million); and Sudapet of Sudan, 5%.

Subsequent to the formation of the consortium, GNPOC entered into agreements with the Government of Sudan for oil exploration and production sharing, and for construction of a 1600-km pipeline from the Heglig and Unity oil fields to Port Sudan. GNPOC is estimated to spend $350-$450 million per year on exploration and development, and slightly less on operating costs, including drilling upstream wells, pipeline operations, and improvements in pumping capacity.

The pipeline was completed in 1999, and was financed, and is owned and operated, by GNPOC. The pipeline currently has a capacity of 250,000 barrels/day (b/d), but it can be expanded with further investment to 450,000 b/d. The Economist Intelligence Unit (EIU) reported in December 2002 that the pipeline’s capacity would be lifted to 300,000 b/d by mid-2003.

GNPOC production represents most of Sudan’s current oil output, but there are other consortia active in Sudan. Lundin Oil of Sweden heads a consortium with rights to exploration in Block 5A, south of GNPOC’s blocks. Partners in Lundin’s consortium include OMV Aktiengesellschaft of Austria, Petronas of Malaysia, and Sudapet of Sudan. Exploration work in Block 5A has been suspended since January 2002 due to instability; on March 27, 2003 Lundin announced that it would carry out repair work on existing infrastructure in its block “as a first step toward eventual re-commencement of activities.”

Other oil infrastructure in Sudan is also owned and operated by oil companies and consortia. The Khartoum oil refinery, which opened in June 2000, was built and is owned by CNPC. The Petronas consortium, led by CNPC and including Qatar’s Gulf Petroleum Company and Thani of United Arab Emirates, operates in Blocks 3 and 7. TotalFinaElf of France has rights to exploration in the southernmost Block 5 Central, also known as Block B. CNPC also operates in Block 6, to the west of GNPOC’s oil fields.

Sudapet is a government owned and operated petroleum company that is included as a minority holder in Sudan’s Oil Exploration and Production Agreements. Sudapet holds a five-percent interest in GNPOC and is entitled to a share of profit oil.

B. Oil Revenues and Uses of Such Oil Revenue by the Government of Sudan

I. October 21, 2002 – March 31, 2003

Due to war fears and supply disruptions in Venezuela, oil prices were high in the last quarter of 2002 and into 2003 (average for Brent Blend 12/02-02/03, $31/barrel). According to Talisman-Energy’s year-end report, prices for Sudan’s crude track with this general upward trend, averaging $29.50/barrel for the last quarter of 2002. Oil prices continued to be volatile in the first quarter of 2003 due to war in Iraq and disruptions in Nigeria’s oil production.

Talisman-Energy reported yearly average Sudanese oil production in 2002 to be 240,436 b/d, with production averaging 244,604 b/d for the fourth quarter of 2002. Production from smaller fields within Blocks 3 and 6 probably raised Sudan’s total production to near 250,000 b/d.

No detailed information is available on government revenue for the period from January to March 2003, but rising production, high oil prices, and a depletion of original development costs suggest that the Government of Sudan likely generated some $800 million for the six-month period from October 2002 to the end of March 2003.

II. January 1, 2002 – October 20, 2002

Sudan’s energy and mining minister, Awad Ahmad al-Jaz, stated in January 2003 that Sudan’s oil production in 2002 averaged 240,000 barrels/day (b/d), up 4% from 2001 and 30% from the average in 2000. The Economist Intelligence Unit (EIU) estimates that around 65,000 to 70,000 b/d are consumed domestically. The following are EIU estimates and forecasts for Sudan’s oil production, reserves and export values:

    2001 2002 2003  2004
Oil production
(,000 b/d)
230  245 280 310
Petroleum reserves
(m barrels)
1000 1250 1450 1600
Oil exports
(US$ m)
1370 1404 1783 1514

Source: Economist Intelligence Unit (02/03)

According to the Center for Strategic and International Studies (CSIS), the Government of Sudan should receive an average of $1.2 billion per year in oil revenue until the end of the decade (assuming the continuation of the civil war and no revenue sharing with the South). This figure takes into account the current and expected production from Blocks 1, 2, and 4 in areas deemed “safe,” but not blocks beset by conflict in southern Sudan (Blocks 3, 7, 5A, 5B, and B) or Block 6, which is controlled exclusively by China’s National Petroleum Corporation and whose production and revenue-sharing agreement has not been made public. Should the southern blocks be exploited, CSIS projected that government revenues would add an additional $1 billion to $1.5 billion annually until 2020.

The Government of Sudan states that oil revenues are placed in the central bank and pooled with other revenue sources, and used for general government expenditures. The government’s budgets have grown in direct proportion to oil revenue since 1999. General budget expenditures indicate an increase in civil servant salaries, development projects, and other expenditures. Since the Government of Sudan’s line-item budget and resource allocation (how oil revenues are spent versus tax or other revenues) are uncertain, it is assumed that an increase in government revenue translates into at least proportionally increased military expenditures. For example, Sudan’s acquisition of HIND helicopters is a recent phenomenon. This weaponry was not in Sudan’s inventory prior to 1999. It can be assumed that oil revenue enabled Khartoum to purchase weapons systems.

C. Effects of Oil Infrastructure on Local Populations

There are numerous reports by various non-governmental organizations highlighting incidents of local populations being adversely affected by military or paramilitary actions in the region in which oil is being exploited. The Civilian Protection Monitoring Team (CPMT) has documented the Government of Sudan’s recent military actions in the Western Upper Nile.

For half a decade, the Western Upper Nile region has been the locus of intensive military activity. Reliable observers, typically from non-governmental organizations, have consistently reported accounts of repeated attacks on civilians and forced displacement of civilians from various areas of Western Upper Nile since 1997. Most affected have been villages flanking the all-weather road constructed, beginning in 1998, from Bentiu to Leer and now to Adok. Construction of the pipeline, oil wells, and this road have not in themselves harmed the civilian population, indeed under different circumstances could, and should, have ushered in better living conditions. However, from the start of construction, violence has accompanied it, with devastating consequences for the local populace.

The bulk of the reports indicate that the Government’s counterinsurgency operation to protect its oil development and infrastructure has had a severe and cumulative impact on indigenous populations. Large areas of formerly populated areas near the oilfields and pipeline have been cleared of any inhabitants. Depopulation has denied rebel forces, who have repeatedly stated their intention of hindering government access to oil areas, a base of support while conducting military operations against strategic targets.

Section 8 (2)
“A description of the extent to which that financing [referred to in paragraph (1)] was secured in the United States or with involvement of United States citizens”

Executive Order 13067 of November 3, 1997 blocks the property and interests in property of the Government of Sudan in the United States or held by U.S. persons and generally prohibits most trade and transactions by U.S. persons with Sudan, unless otherwise authorized by the Department of the Treasury’s Office of Foreign Assets Control (OFAC). Specifically, most financial dealings with Sudan are prohibited, including the performance by any U.S. person of any contract, including a financing contract, in support of an industrial, commercial, public utility or governmental project in Sudan. These provisions prohibit transactions within the United States or by U.S. citizens that facilitate Sudan’s financing and construction of infrastructure and pipelines for oil exploitation.

Since the imposition of economic sanctions in 1997, Sudan has been prohibited from securing financing of infrastructure and pipelines for oil exploitation in the United States or with the involvement of U.S. citizens. Prior to the imposition of sanctions in 1997, the Department of State did not review the financing of petroleum-related activities in Sudan from the United States or with the involvement of U.S. persons.

In January of this year, the Administration issued a license to an American company to purchase Sudanese-origin oil so that the company could remain in business consistent with domestic laws of the country in which it was operating. Those laws require that all domestic retail distributors of petroleum products purchase oil products from the state-owned petroleum distribution company. A U.S. government license became necessary when the state-owned entity indicated that it was likely to begin importing oil from Sudan. As of March 21, however, the U.S. company has reported that it had not needed to purchase any Sudanese-origin oil under this license so far. The license does not authorize any transactions regarding the financing of Sudan’s infrastructure or pipelines for oil exploitation. The Administration retains the discretion to review (and rescind) the license as circumstances warrant.

In mid-2002, the U.S. government also issued a license to a U.S. company to take certain actions to sell its equity interest in its Sudanese subsidiary, which has since been sold to a third country company.

Section 8 (3)
“The best estimates of the extent of aerial bombardment by the Government of Sudan, including targets, frequency, and best estimates of damage.”

I. October 21, 2002 – March 31, 2003

From the time the Government of Sudan signed the October 15, 2002, Memorandum of Understanding on cessation of hostilities, it has ceased to employ the tactic of aerial bombardment in southern Sudan, in the strict sense of dropping bombs from fixed-wing aircraft. This change represents a shift of tactics, since aerial bombardments previously were a major feature of the Government’s actions in the south. However, the SPLM/A alleged in mid-November that the Sudanese air force dropped bombs in the Kassala region in eastern Sudan when the Sudanese military mounted a ground offensive against an opposition force associated with the SPLM/A.

Although there were no aerial bombardments in the south in this time period, the Government of Sudan made use of helicopter gunships, beginning in January 2003, to support attacks by its armed forces and associated militias in the area of Western Upper Nile, the principal locus of hostilities in southern Sudan in the period since October 21. The World Food Program has reported that helicopter gunships supported Sudanese ground forces in an attack on Rank and Tam, in the Western Upper Nile, on January 3. The SPLM/A lodged formal complaints with the Secretariat of the Inter-Governmental Authority on Development (IGAD) of attacks supported by helicopters on or near Riek and Tam (January 11-13) and Kual Kuony (January 16). The Civilian Protection Monitoring Team (CPMT), in its report of February 6 of its on-the-ground investigation of military events in Western Upper Nile in the period December 31 to January 30, found evidence of helicopter gunship attacks against Lou, north of Tam, in the first half of January.

II. January 1, 2002 – October 20, 2002

There were numerous reports of air attacks by the government on southern Sudan in 2002, peaking in the months of June and September. According to reports from various sources of varying reliability, approximately 85 instances of aerial bombardment by fixed-wing aircraft in the year 2002, of which approximately 35 were reported to have produced human casualties, resulted in an estimated 200 civilians killed.

A conservative count would suggest there were more than 50 instances of air attacks January-June, of which there were at least twelve instances of attacks by helicopter gunships. The remainder of these attacks were aerial bombardments from fixed-wing aircraft, more than 30 of which occurred in June (principally in Equatoria, at a time when the Government of Sudan was increasingly fearful of an attack in Eastern Equatoria by the SPLA). One of the most serious attacks was by helicopter gunships in the immediate area of an ongoing United Nations food distribution in Bieh, Western Upper Nile, on February 20, 2002. The World Food Program had notified the Government of Sudan 48 hours in advance and the Government of Sudan had approved the flight request. Twenty-four civilians were killed and many more injured. Several sources reported that aerial bombardments and helicopter gunship attacks, associated with a ground offensive, produced 50 civilian deaths in the Western Upper Nile May 21-26.

Coincident with the success of the first stage of the Machakos peace process in July and August, there was a lull in military campaigns, including air activity. However, when the Machakos process broke down in September following the SPLA’s temporary capture of Torit, in Eastern Equatoria, there was a sharp increase in reported aerial bombardments, not only in Equatoria but in all sectors of southern Sudan.

After the CPMT became operational in October, it devoted its first investigative effort to a much-publicized report that a Government of Sudan MiG fighter-bomber had deliberately bombed a cattle camp near the Yei River in Bahr al-Jabal (Equatoria) on September 21, killing fourteen civilians, including four children, as well as over fifty cattle. The CPMT concluded that an attack with resultant civilian casualties did occur, but that the objective of the attack had been an artillery piece located near the camp.

Attached is a summary map of aerial bombings during 2002 as prepared by the Department of State’s Bureau of Intelligence and Research, Humanitarian Information Unit. The map does not reflect attacks by helicopter gunships or any ground actions. A number of locations where aerial bombardments are reported to have occurred are not reflected on the map because geographic coordinates were unavailable. This map is meant only as a visual aid and not as the Department’s confirmation of the veracity of all bombings reported.

It is important to note that aerial bombardment during the first ten months of 2002 reflected a longstanding pattern. The Government of Sudan had utilized the tactic of aerial bombardment against the civilian population of southern Sudan throughout the 1990’s. One study prepared for the U.S. Committee for Refugees documented nearly 300 air strikes against 100 villages and towns in southern Sudan and the Nuba Mountains during the period 1994-1998, but estimated that the actual number was higher. Medecins sans Frontieres reported more than 60 aerial bombardments in Equatoria alone in 1999. Sudan Focal Point reported 121 bombing incidents in southern Sudan during the last six months of 2000. A report by the U.S. Committee for Refugees listed at least 152 aerial attacks in 2000 and 138 attacks in 2001.

Section 8 (4)
“A description of the extent to which humanitarian relief has been obstructed or manipulated by the Government of Sudan or other forces.”

I. Introduction

Throughout the Sudanese civil war, the Government of Sudan (GOS) has obstructed and manipulated humanitarian relief. The government for two decades employed a strategy of blocking or delaying the delivery of humanitarian assistance, including food delivery, water and sanitation activities, and health projects. It frequently imposed bans on relief flights and attacked relief centers. After the signing of the October 15, 2002, Memorandum of Understanding (“MOU”) that called for both a cessation of hostilities and unimpeded humanitarian access, the government greatly reduced its obstruction and manipulation of humanitarian aid, and humanitarian access has improved in the period since enactment of the Sudan Peace Act (PL-107-245), yet there remain many areas of continued concern.

In 1989, Operation Lifeline Sudan (OLS), a tripartite agreement among the Government of Sudan, the UN, and the Sudan People’s Liberation Movement/Army (SPLM/A), was established as the main avenue for assisting the Sudanese population affected by war through a system of negotiated access. As part of this agreement, each Sudanese party was afforded the right to deny access for security reasons to locations requested monthly by the UN/OLS. Several months after OLS began, the present Sudanese government came to power and began denying OLS access to numerous locations.

The government has continued to hinder humanitarian relief in many ways, for example by levying procedural requirements on OLS that delay humanitarian assistance. The government’s military offensives in the oil-producing Western Upper Nile have also had a negative humanitarian impact. Occasionally the Sudan People’s Liberation Movement has denied flights to specific areas and otherwise impeded humanitarian assistance, but no SPLM/A obstruction has taken place within the calendar year 2002 and beyond.

II. October 21, 2002, to March 31, 2003

During this period, humanitarian access improved. After signing the October 15 MOU, the Government of Sudan ceased to impose outright bans on relief flights. However, there are still some areas of concern.

In early 2003, government-allied militias attacked villages, including villages used as relief centers, around the oil fields in Western Upper Nile, bringing an already serious inadequacy of food supply in the region to crisis levels by uprooting thousands of villagers, destroying their food stocks, and disrupting international relief efforts. On January 20, 2003, the Civilian Protection Monitoring Team investigated and confirmed that government-allied militia had attacked Lara and Mayan Jur. The next day, a militia attacked the village of Leel. All three areas are important UN food distribution sites, and the attacks stopped relief operations for days, denying food and relief to needy populations. As the CPMT concluded in its report of February 6, “Operation Lifeline Sudan (OLS) has been able to deliver some relief assistance to Leel and other areas affected by recent fighting; nevertheless, the humanitarian situation in these areas and along the road remains desperate.”

From September 2002 to January 2003, the government denied flight approvals to UN cargo aircraft, called Buffalos, which carry vegetable oil, vehicles, and fuel for smaller planes. These denials severely disrupted operations by making logistics more difficult and impairing most non-food deliveries. In order to get the Buffalo aircraft back in the air, the UN agreed in some cases to have the aircraft stop in government-controlled areas for inspection on their way to locations in Southern Sudan. Personnel of international non-governmental organizations and southern Sudanese workers often use UN aircraft, and their fear of detention or harassment by government authorities have prompted them to seek alternate transport, severely impairing their mobility.

The positive developments in humanitarian access, however, outweigh the remaining impediments. Since the signing of the October 15, 2002, MOU, and as a result of international pressure, the government acceded to a notification procedure for UN assistance deliveries. Previously, all UN flights required approval from the government before departure; now the UN simply notifies the government of impending flights. Similarly, as a result of pressure from the UN and the international community, the government has begun to allow some humanitarian activities in Southern Blue Nile, an area never before officially accessible by the UN. Since the Government of Sudan considered Southern Blue Nile (as well as eastern Sudan) to be excluded from the October 15 MOU provision for unimpeded humanitarian access, a separate agreement was negotiated between the UN and the parties at the Technical Committee for Humanitarian Assistance on January 19, 2003. Due to repeated claims of inequity and subsequent obstacles to delivering assistance, the first delivery into Southern Blue Nile did not commence until March 19, 2003.

III. January 1, 2002 to October 20, 2002 (and Earlier)

The one major improvement in humanitarian access during this time was in the Nuba Mountains. Since the beginning of the conflict, the Nuba Mountains region in central Sudan had been particularly isolated from humanitarian assistance. In 2001, local officials had documented starvation and starvation-related deaths and assessed the need for over 2,000 metric tons of food relief. Special Humanitarian Coordinator for Sudan, Andrew Natsios, visited Khartoum and negotiated the first government-approved humanitarian flight to the SPLM/A areas of the Nuba Mountains on August 30, 2001. Building on this achievement, Special Envoy Danforth negotiated a ceasefire still in effect, which provides full humanitarian access to all regions within the Nuba Mountains.

Aside from the Nuba Mountains, the Government of Sudan placed major obstacles in the way of humanitarian assistance in southern Sudan prior to the October 15 MOU signing. Its principal tools were repeated attacks on relief centers even after it had authorized humanitarian assistance operations at those centers and official denial of authorization to conduct humanitarian assistance activities to certain places or in entire regions.

A. Attacks on relief centers

Attacks on relief centers, carried out by helicopter gunships, high-altitude bombers, or armed militias, were highly disruptive. They prevented the delivery of humanitarian assistance, not only through killing intended beneficiaries (and in one case in 2002 killing a humanitarian relief worker), but also by causing humanitarian workers to be evacuated and civilians generally to stay away from relief sites.

There were four documented attacks on relief centers in southern Sudan in 2002 (in February, May, June, and September). The most disruptive attack occurred February 20, 2002 in Bieh, Western Upper Nile. The World Food Program (WFP), following normal procedure, gave 48 hours notice to the government, and after receiving approval by the government, proceeded to deliver aid to an area clearly marked as a WFP food drop. During the distribution, a government helicopter gunship fired on civilians in the immediate location and in the presence of two UN staff. Seventeen civilians were killed immediately (later reports indicated 24 deaths) and an unknown number were injured.

B. Denials of humanitarian assistance

In the first half of 2002, the number of denied locations fluctuated but was normally in the range of 20-80 for any given month. The government invariably cited the security of international staff as the reason for denial, although OLS security officials with in-depth knowledge of the situation on the ground often disputed the government’s security assessment. Denied locations varied from 23 (May) to 44 (March) and then tapered off to fewer than 20 from July-September. However, in May 2002, the government introduced a new device for effectively denying access, by designating some locations as “unknown locations.” This new method of denying humanitarian assistance was disingenuous, since OLS had been flying to many areas on the “unknown” list for many years and the government had flown to some of the “unknown” locations itself. The effect of this new device was to increase the number of denied locations, with a peak of 75 in June.

For four years prior to signing the October 15 MOU, the government withheld authorization for humanitarian assistance to be delivered by air to an entire zone covering the southern tip of Sudan. Insecurity was the reason given, but the western part of this area was among the most secure and stable in southern Sudan. Denial of air access to this large area forced all relief operations to be carried out overland. In the less secure eastern part of the zone, several instances occurred of armed bandits attacking relief vehicles and killing relief workers. Villages such as Nimule had to be accessed by road through northern Uganda, exposing humanitarian workers to numerous attacks by the Lord’s Resistance Army.

Moreover, following the SPLA’s seizure of Torit at the end of August, 2002, the government imposed a nine-day ban of flights going over Eastern and Western Equatoria from Lokichokio beginning September 26. This ban effectively denied access to all of southernmost Sudan, not just the border strip. The World Food Program estimated that 400,000 needy people went without food aid during this period and hundreds of international staff were stranded.

The government regularly denied access to individual locations in Western Upper Nile in 2002. However, during several months in 2002, it denied humanitarian access to all of Western Upper Nile. This blanket denial of an entire state is more severe than denials of individual locations. By preventing humanitarian assistance from reaching displaced persons and others in need over a wide area geographically, it is less likely that people in need of assistance can reach areas nearby that may have access to humanitarian assistance. In these cases, humanitarian organizations willing to work outside of the OLS framework and provide assistance to denied locations remain vitally important to efforts to reach populations in need. Further information on non-OLS activities funded by the United States was previously transmitted to Congress on March 10, 2003.

IV. Actions by the United States

The United States Agency for International Development (“USAID”), the Department of State, and Special Envoy John Danforth, have repeatedly reminded the Government of Sudan and the SPLM/A of their commitments to provide unimpeded access for the delivery of humanitarian assistance. Specifically under the Administrator’s mandate as Special Humanitarian Coordinator for Sudan, USAID has coordinated efforts of the international donor community to provide humanitarian assistance to Sudan and to work with the United Nations and the parties to improve humanitarian access to Sudan. While much progress has been made to date, there is still the need to remain vigilant on humanitarian access issues in order to remove remaining impediments. In particular, concerns remain that access is still limited by the Sudanese government to needy populations in Eastern Sudan, and USAID is focusing significant efforts on fully opening this area of Sudan long isolated from international assistance.

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