WASHINGTON Ñ Sudan has built three weapons factories with Chinese help in a drive to halt the rebel advance in the oil-rich south.

A new report by British and Canadian organizations said the weapons factories were recently completed near Khartoum. The report said the factories engage in the manufacture of weapons and ammunition. The factories were believed to have been financed by Sudan's oil revenues.

Sudan is said to earn at least $500 million a year from oil production in the south of the country. That revenue could double within two years if development of oil fields by Chinese and Western contractors is completed, Middle East Newsline has reported.

"It appears, rather, that oil revenues received by the government are linked to increases in military expenditure," the report said. "For example, the Government of Sudan recently established, with Chinese assistance, three new factories for the manufacture of arms and ammunition near Khartoum."

The investigation was conducted between April 8 and 27 by Georgette Gagnon, a member of the Canadian government-sponsored mission that visited Sudan in December 1999, and John Ryle, an Africa specialist who has focused on Sudan.

The report says Khartoum has deployed attack helicopters to launch attacks against civilians around the oil fields, developed by Chinese and Western firms, and drive them out of the region of the Western Upper Nile.

Some of the helicopter gunships operate from facilities built, maintained and used by the oil consortium. A leading partner in the consortium is the Canadian firm, Talisman Energy.

The report said that despite a pledge by Talisman the company concedes that Sudanese troops use oil facilities for attacks against civilians. At least two attack helicopters were found at Talisman's facility at Heglig.

"These attacks appear to be part of a renewed Sudan government strategy to displace the indigenous non-Arab rural population from rural areas of the oil region in order to clear and secure territory for oil development," the report said.

The House of Representatives has approved legislation that would ban from U.S. stock exchanges foreign companies that explore for oil in Sudan. Talisman stocks are traded on the New York Stock Exchange.

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