This week, the Government of Sudan announced plans to drill the first of 19 scheduled oil wells in the Darfur region, which has not before seen such activity. It is expected that southern Sudan, which holds an estimated 85% of Sudan’s oil, will secede from the north following the January 2011 referendum on independence. To offset a significant potential loss of revenue, the northern government is seeking aggressively to increase the country’s production of crude oil, and expand oil operations in regions such as Darfur that would remain in the north in the event of southern secession.

With conflict ongoing in the area, and a history of association between oil activities and violence in Sudan, this news raises important concerns.

• Oil production could fund capacity for violence. The oil industry has been a significant source of revenue for the Sudanese government, an estimated 70% of which is funneled to Sudan’s military, which has been connected directly to violent conflict in Darfur.
• History shows the potential for oil activities to be associated directly with violence and military activity. Some companies have been accused of complicity in war crimes and crimes against humanity committed during what has been characterized as a military campaign by the Government of Sudan to secure and take control of oil fields during the war fought between the north and south from 1983 to 2005. Abuses included indiscriminate attacks, intentional targeting of civilians, burning of shelters, and the displacement of hundreds of thousands. Concerns about a reoccurrence of such events should be of great concern, given that insecurity and violence in the Darfur region is ongoing
• Groups opposing oil activities have threatened violence that could prompt clashes that put civilians in harm’s way. Darfuri rebel groups, such as the Justice and Equality Movement (JEM), have targeted oil companies in the past, kidnapping foreign workers and attacking oil fields. This week’s announcement has prompted further threats of violence from JEM, who announced, “we are officially threatening the Chinese and anyone else who shall try to extract oil from this region.”

These concerns, as well as the companies involved – Sudapet, CNPC, Ansan Wikfs – are discussed in depth in Conflict Risk Network’s Sudan Company Report, used by dozens of major institutional investors. Contact CRN director Melany Grout at Grout@genocideinternvention.net for more information.

Given the risks these concerns pose for people on the ground, companies must take special care to ensure they do not infringe on human rights. Not only is it more difficult for companies to do no harm in conflict-affected areas like Darfur, but the failure to adhere to standard corporate responsibility practices carries the potential for heightened impacts on communities and on the companies themselves. CRN encourages oil companies to – at minimum – uphold their responsibility to respect human rights, as outlined in the recently released Framework for Business and Human Rights (Ruggie Framework) which calls on companies to conduct a four-step due diligence process to avoid infringing on human rights.

CRN is also actively working to engage with corporate actors in Sudan’s oil sector on these issues in advance of January’s referendum. For more information, please contact Maureen O’Brien, CRN’s Head of Engagement, at Obrien@genocideintervention.net.