SPLA Warns Khartoum.

SPLA spokesman Kuol Diem Kuol on Aug. 6 said North Sudanese troops still in the south's oil areas were now "occupation forces" since they had not left the region as agreed under a 2005 peace pact. He said SPLA's southern forces had almost finished withdrawing from areas they had to leave under the accord.

The January 2005 deal created separate north and south armies, joint units for main towns and the oil areas and required both to redeploy on either side of the 1956 north-south border by July 9, 2007. But the northern Sudanese Armed Forces (SAF) missed the redeployment deadline, and a senior UN official said most of the forces still in the south remained in the oil areas.

Kuol said: "We are not happy. The SPLA is waiting for orders from the Southern Sudan Security Council on how to handle this issue of occupation forces". He said some 16,600 northern troops remained in the south's two largest oil-producing states and the still contested oil-rich Abyei area, which under the deal can choose whether to join the south or stay in the north by 2011. Kuol said: "[They] are staying illegally in a territory that they're not supposed to be in".

The SPLA also missed the deadline to withdraw from two transitional areas, Blue Nile and South Kordofan. The SPLA says that was because the joint units, supposed to take over after their withdrawal, were not yet functioning. But Kuol said: "All...SPLA soldiers have withdrawn out of Blue Nile, except for...120 soldiers" guarding tanks, anti-aircraft weapons and heavy artillery which cannot be transported into south Sudan because of heavy rains, adding: "Once it is dry we will move them into the south". Similarly SPLA troops were moving out of South Kordofan State, with less than 300 remaining to guard heavy artillery.

The two areas were now under the control of the Joint Integrated Units (JIUs) but Kuol said these were not able to deal with an uneasy security situation in South Kordofan. He said: "The militias are still active...are not yet disarmed. The whole population is not yet disarmed. [It is] very dangerous. They are not trained together, they are not the JIU envisaged by the peace agreement".

Last year 150 people were killed in clashes between the north and south armies in the southern town of Malakal, sparked by northern-aligned militias. The discovery of oil in the south in the 21 war years further inflamed the conflict in which 2m people died and some 4m were displaced.

Chinese Investments: China has invested over $6.2 bn in Sudan's oil infrastructure, including a 900-mile crude oil export pipeline to Port Sudan on the Red Sea. On a continent of mighty rivers, Africa's biggest ongoing dam project, the Merowe Dam, will soon provide 1,250 MW to this power-starved country, courtesy of the Chinese International Water & Electric Corp.

The Kotolok oil production system rises from the sandy earth of the south like an industrial mirage. Winding dirt tracks suddenly turn into straight asphalt roads, each signed in English and Chinese, each pointing to oil. Along the Nile north from there one traces a line of Chinese influence. Chinese wells pump oil in former killing fields, and Chinese workers refine it north of Khartoum. Several locals have been killed by militiamen and dozens jailed for protesting the forced displacement of some 70,000 people for the $1.5 bn mega-project. More have been killed in the northern village of Kajbar for resisting another Chinese giant dam project.

While US firms are barred from doing business in Sudan and European IOCs other than Total stay away for fear of bad publicity, Beijing provides Khartoum with the cash, material, and manpower to jump-start the oil industry, revamp its power grid, and upgrade its irrigation systems. Chinese weapons sales sustain the SAF in Darfur, although Beijing denies violating a UN arms embargo. Now Chinese oil companies have moved into Somalia and are awaiting peace in Darfur to move there. Darfur has big oil potentials and huge underground water resources.

Buying Sudanese crude at a discount, China is Khartoum's biggest oil customer. The Islamist rulers in Khartoum see their arrangement as a pragmatic end run around an overbearing West. But in the south, Asian firms' oil extraction methods poison waterholes and kill livestock.

China's popularity with Khartoum leaders - Beijing has donated a new yacht to President Omar Hassan al-Bashir - is not mirrored in the attitude of residents in the southern oil areas. Locals there are jailed and beaten up for protesting a lack of jobs. A local was on Aug. 10 quoted as saying: "It is our lands, but we get nothing from this. This is all for China and the Arabs in Khartoum".

White Nile Wants Oil Block Back: UK-listed White Nile is lobbying against a decision to remove it from south Sudan's oil E&P Block B, saying it had halted all drilling work in the swampy area. South Sudan's Industry Minister Albino Akol Akol in July said a long-standing dispute over the massive block had been resolved in favour of Total of France which held rights to the block granted by Khartoum.

White Nile's social and political consultant Acuil Malith Bangol was on Aug. 5 quoted as saying: "We have stopped drilling operations but we are still doing our community work". White Nile was helping build roads, health facilities and giving scholarships to the local community in Jonglei state. Bangol said his firm was lobbying against the decision, adding: "There are positive developments". He declined to elaborate.

The June 17 decision taken by the National Petroleum Commission (NPC), a north-south body formed after the January 2005 peace pact, said a committee had been formed to assess compensation to White Nile. The firm is 50% owned by south Sudan's state oil company Nilepet. White Nile spent $18m on seismic testing alone in the block before drilling its first exploration well earlier this year in the 67,000 square km concession.

Minister Akol on Aug. 3 said the compensation team was hoping to finish work within a month, adding: "[Their] report will be presented to the National Petroleum Commission which will decide how it will compensate". He said the compensation team's work was being slowed because the governor of Jonglei state was away. White Nile did not have to remove any of its equipment until the issue of compensation was cleared. Nilepet will retain 10% of the Total-led consortium under the new arrangement for Block B. Akol said: "Nilepet is going to be an independent public company and will not be a part of White Nile".