SUDAN - Darfur Rebel Group Attacks The Main Oil Group - The Background.

Since it was discovered in 1979, crude oil has been a growing factor in politics and governance in Sudan. When production first came on stream in 1999, it revived the government's ability to wage war against the Sudan People's Liberation Movement (SPLM) and its army (SPLA) in the south and ushered in external investment stimulating rapid growth in an economy under US economic sanctions since 1997.

Oil is literally the fuel which drives things in Sudan, as well as the Comprehensive [North-South] Peace Agreement (CPA) which was signed on Jan. 9, 2005. Though the CPA was only one of several core issues negotiated in Naivasha, Kenya, the 50% share of southern oil money which the Government of Southern Sudan (GoSS) now receives accounts for nearly all its revenue. A drop in that revenue in March 2007 caused huge problems for the GoSS and the SPLM/SPLA to meet salary demands. National income sources in Sudan are more diversified. But exports of crude oil and refined petroleum products remain Sudan's largest source of foreign currency, allowing Khartoum's ruling Islamist group, the National Congress Party (NCP), to wage its war in Darfur and buy off challengers as it pursues divide and rule tactics throughout the country.

Meeting in Khartoum on Oct. 18, 2007, one week after the GoSS suspended its association with national unity government, President Omar al-Bashir and his estranged First Vice-President, SPLM leader Salva Kiir, failed to bring the disaffected former southern rebel ministers (the GoSS) back despite an Oct. 17 cabinet reshuffle made to address their concerns. The lengthy meeting, however, did result in a pledge to continue implementing the CPA which ended a two-decade North-South war and Kiir agreed to retain is position as first VP. Presidential spokesman Mahjub Fadul said a formal swearing in of the new cabinet - which was to signal a healing of the break - was put off until certain issues had been settled and because some of the ministers were outside Sudan. Fadul said: "The meeting decided that work within the presidency should continue as had been agreed, and discussions are ongoing over the outstanding issues".

Sudan thus faced its biggest political crisis since the CPA was signed between the Arab and Muslim-dominated North and the mainly Christian and animist black South. The North-South war had claimed some 2m lives.

The SPLM accuses Khartoum of multiple breaches to the CPA, including not sharing the country's oil wealth as agreed, not pulling Army troops out of southern Sudan, and remilitarising contested border zones where the main oil reserves are located. The rising tensions between the two former opponents was underlined by an incident in the south on Oct. 18, when security officials affiliated with the SPLM arrested and beat up members of the NCP.

Ali Tamim Fartag, a northern official based in the south, accused the SPLM of arresting a judge and a trade unionist and seizing NCP offices in the North and West Bahr al-Ghazal states. His report gave no indication as to the reason for the arrests.

Under the CPA, southerners hold about a third of the positions in Sudan's government. In Bashir's Oct. 17 cabinet reshuffle, he had demoted a number of SPLM ministers whom the southerners had complained were acting too close to the North's interests. It was later revealed that part of the delay in bringing the government back together was due to differences among the southerners themselves, with hardliners calling for the resolution of all issues before a formal reconciliation.

The independent Sudanese daily al-Rai al-Aam quoted SPLM hardliner Pagan Amum as saying on Oct. 18 no swearing in of the new ministers would take place until everything had been settled. GoSS spokesman Samson Kuwaji had earlier said a ceremony was expected soon after the Kiir-Bashir meeting. According to Fadul, however, no date had been set for the ceremony.

A return to fighting across central and southern Sudan is likely to exacerbate the ongoing conflict in the Darfur region, where more than 200,000 people have been killed and 2.5m have been displaced and the world's largest humanitarian relief effort is under way.

The petroleum sector in Sudan, including that of the GoSS, is not transparent and is still controlled by the NCP. Corruption in the north is rampant, though the layers of NCP-affiliated companies and security agencies thriving on state resources make it appear relatively subtle.

Corruption is an equally worrying problem in the South - within the GoSS - where it is a lot more visible. But the GoSS is waking up to the threat posed by the vice. The entire Ministry of Finance staff of the GoSS has been sacked, including the minister, and an anti-corruption commission established.

Yet, the centrality of oil in Sudan's economy means that changes must be made at the national level if they are to take hold. The National Petroleum Commission (NPC), the joint NCP-SPLM oversight body created under the CPA, which finally got off the ground after more than a year of procedural roadblocks, is an important place to start.

The SPLM is still largely shut out of the oil sector, reliant on calculations and figures delivered by the NCP-dominated finance and energy ministries. Given the oil-rich Abyei area's unique political status, defining its oil resources is vital to better understanding the actions and calculations of the parties, as well as avoiding conflict and finding possible solutions (see chronology in Gas Market Trends of this week).