March 7, 2012 (JUBA) - As South Sudan’s oil dispute with Sudan continues Juba announced on Wednesday that it plans to start exporting oil using trucks to transport its oil to ports in Kenya and Djibouti. South Sudan stopped exporting its oil through Sudan last month as part of a transit fee dispute.
Stephen Dhieu Dau, the country’s oil minister told Reuters on Wednesday that South Sudan plans to build a temporary underwater oil pipeline along the Nile from the oil fields near the border with Sudan to Juba the South Sudanese capital, where it will be exported overland.
The Wall Street Journal reported on Wednesday that South Sudan’s overland exports through East Africa will be about 10% of the countries output prior to the halt in production, which was around 350,000 barrels a day. Dau told the Wall Street Journal that there was no time frame for the plan to export crude by land, using South Sudan’s poor road network.
The eight month old nation relied on oil revenues for over 98% of its budget before the shutdown. South Sudan is now looking at period of severe austerity, while it builds a new pipeline to the Kenyan port of Lamu. South Sudanese officials claim the new pipeline will be complete before the end of the year but analysts say it could in fact take years and is not financially viable considering South Sudan’s known oil reserves.
When landlocked South Sudan seceded in July last year as part of a 2005 peace ending decades of conflict it took with it 75% of the country’s 500,000 barrels per day oil production.
The impasse between Sudan and South Sudan over the issue is one of the causes of globally high oil prices in recent weeks. The lack of revenue will have a negative affect on both economies.
Dau told Reuters on Wednesday that South Sudan hopes to reach agreements to finance the project by June. Companies from China, Japan, Europe, South Korea and the United Stated are in talks with Juba about financing the new pipelines. One pipeline carrying Nile blend will go through Kenya and another carrying Dar blend will travel through through Ethiopia to Djibouti, Dau said.
“It is possible that an agreement could be reached during this round of negotiation if the Sudanese delegation at the talks accepts international charges”, Dau told Sudan Tribune on Wednesday.
OIL TALKS
South Sudan wants to pay less than $1 a barrel, while Sudan wants to be paid $36 per barrel that is exported and refined using northern infrastructure. Juba halted oil production when it was discovered that Sudan was confiscating southern oil as payment in kind for $1 billion worth of fees it says it was owed.
Barnaba Marial Benjamin, South Sudan’s minister of information on Wednesday said “no amount of threat” would compel it to sign an “unfair deal” with the government of Sudan to resume oil production.
Marial said his country was “fully aware” of all campaigns the government in Khartoum has launched allegedly to put pressure on Juba to begin pumping oil again.
“They are not only describing decision of the cabinet to shut down oil production as suicide" he said. Sudan analyst Alex de Waal has also described Juba’s decision as economic suicide.
Khartoum also accuses Juba of backing rebel groups in its territory claiming that the oil shutdown and rebel backing is proof that South Sudan is agitating for regime change.
"This is not true. They are part of campaign to divert attention of the international community from addressing real issues”, Marial told reporters on Wednesday.
The government spokesman confirmed that talks between the two countries resumed in the Ethiopian capital on Tuesday to resolve a number of outstanding issues.
Marial questioned whether Khartoum was serious to reach a fair deal with the Juba government. He said that he new both sides were in Addis Ababa but not whether direct talks had reconvened.
South Sudan officially became an independent state in July 2011 but remains at loggerheads with Sudan, from which it split, over a number of issues. Many parts of the 2005 Comprehensive Peace Agreement were not implemented threatening to reignite conflict between the two former civil war parties. Most notable of which is border demarcation, citizenship, oil charges and a final agreement over the future of the contested border region of Abyei.
The minister said their delegation would discuss a number of pending issues, although discussions on oil are likely dominate the talks. He said that no amount of pressure would compel his government to accept an unfair deal.
He accused Khartoum of using its media to issue threats including calls to "wage war" against his country.
“Khartoum is seriously mobilising and beating drums of war against South Sudan and at the same time claims it is the South which is not willing to reach a deal with them. This is double standard. They think they are clever but everybody knows this”, he said.
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