South Sudan's energy deals arouse concern

KHARTOUM, Sudan, July 21 (UPI) -- South Sudan, the world's newest country, is already embroiled in controversy over its energy assets.

A South Sudan member of Parliament has questioned the suitability of Switzerland's Glencore International to be allowed to form a joint venture with South Sudan's Nile Petroleum Corp., known as Nilepet.

Nilepet announced July 13 that it was establishing a joint venture with Glencore International that would produce, process, refine and transport the new nation's energy products, the Sudan Tribune reported Wednesday.

"The joint venture will help the Republic of South Sudan develop its national oil company through skills transfer and training and will be responsible for marketing the crude oil from July onward," said Nilepet Managing Director Mangok Kali Mangok.

Speaking on condition of anonymity however, a South Sudan MP said that the national oil company risks being duped by entities like Glencore, with "unclear and lacking proper records."

"We need to institute proper inquiries into such joint ventures like the one between Glencore and Nile Petroleum Corp.," the source told the Tribune. "As South Sudanese, we risk losing to investors, if we do not trade professionally."

Raising concerns in South Sudan, Glencore was founded by fugitive U.S. financier Marc Rich, who until receiving presidential pardon in 2001 from President Bill Clinton, was wanted in the United States by the FBI for alleged tax fraud.

Glencore International is a multinational mining and commodities trading company with headquarters in Baar, Switzerland, and is the world's largest commodities trading company. It had a 2010 global market share of 60 percent in the international zinc market, 50 percent in the global copper market, 9 percent in the world's grain market and 3 percent in the international oil market.

In May Glencore International was listed on the London Stock Exchange and is an element of the FTSE 100 Index, with a secondary listing on the Hong Kong Stock Exchange.

South Sudan's deal with Glencore International, signed this month, in effect puts Glencore in competition with Chinese and Indian companies, which have dominated South Sudan's oil-producing ventures.

Sudanese oil exports are primarily directed to Asia, with China purchasing more than half of Sudan's total exports.

South Sudan Director General for Energy Arkangelo Okwang said, "We have already started shipping -- we shipped 1 million barrels today."

Still unresolved is the issue of how South Sudan's Nilepet will share revenues with its northern partner, Sudan's state-owned oil firm Sudapet.

As for Nilepet's relationship with Sudapet, Okwang said, "We are still negotiating … nothing is yet clear."