Wednesday 14 March 2012 – The Chemical Engineer… proud winner of a 2011 Tabbie Award for best single news article

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South Sudan relies on oil for almost 98% of its income

08/03/2012

South Sudan eyes trucks for oil exports

Cut off from pipeline through Sudan

Richard Jansen

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SOUTH SUDAN is planning to export its oil supplies with trucks, as it remains locked in a bitter row with its northern neighbour over pipeline fees.

Petroleum minister Stephen Dhieu Dau told the Wall Street Journal that it is planning to transport a minimum of 35,000 bbl/d by road, 10% of the country’s total production. He said it will then ship the oil from Mombasa, in Kenya, as well as the small east-African nation of Dijbouti, but added that the plan is not finalised, and did not indicate when it may begin.

Dau also said that he is investigating the possibilities of building new pipelines through Kenya and Ethiopia, as well as the country’s first refinery. He claimed that such a project could be completed within a year.

“We know there are challenges, but we are trying our best because this project is a priority for the nation,” Dau told the Wall Street Journal.

South Sudan relies on oil for almost 98% of its income, but closed down its entire production following a disagreement with Sudan. It made the move in response to Sudanese plans to levy an unspecified percentage of southern oil in lieu of pipeline fees.

The south took three-quarters of the country’s oil production when it seceded from Sudan last July, following a civil war that claimed an estimated 2m lives. However, the new nation lacks any infrastructure to export the oil, instead relying on two Sudanese-owned pipelines. Despite months of negotiations, the two countries have not been able to agree on how much South Sudan should pay for using the pipelines. According to the Sudan Tribune, the south has been insisting on paying no more than US$1/bbl, while Sudan has been asking for more than US$30/bbl.

Both governments now claim to be owed money by the other, with the north asking for US$1b in unpaid fees and the south accusing Sudan of “looting” US$815m in seized oil revenues. Only last month, the president of Sino-Malaysian oil company Petrodar was expelled from South Sudan, after allegedly helping Sudan seize oil shipments. The company – which was responsible for more than 60% of the country’s oil production – denies any wrongdoing.

The two countries began fresh talks on the topic earlier this week, though the tension between them remains high, with the South claiming that Sudan is behind a series of bomb attacks that struck its oil fields last week.

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