Sudan to release South Sudan oil shipments in port

January 28, 2012
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Kiir with Kenyan VP Kalonzo Musyoka/File
ADDIS ABABA, Jan 28 – Sudan agreed Saturday to free ships with South Sudanese oil as a goodwill gesture to ease negotiations aimed at resolving a furious row over pipeline transit fees with its southern neighbour.

The two former civil war foes have held lengthy negotiations, but have been unable to reach agreement over the dispute which has seen Khartoum seize oil and South Sudan take the drastic step of shutting oil production.

“We are ready to continue these talks and to prove it, we are… releasing vessels in Port Sudan to allay fears,” senior Khartoum official Sayed al-Khatib told reporters in Addis Ababa, where the talks are being held.

“The vessels will be free to leave immediately,” al-Khatib added. “We expect the (South Sudan oil) shutdown to be halted and reversed.”

Sudan has been detaining three ships carrying 2.2 million barrels of oil.

In addition, Khartoum admits to have confiscated 1.7 million barrels of South Sudan crude, a measure it said was to compensate for Juba’s use of its pipeline and refinery.

On Friday, South Sudan President Salva Kiir, who met with Sudanese President Omar al-Bashir in the Ethiopian capital for the oil talks, failed to sign an agreement due to Juba’s concerns over the detained ships, al-Khatib explained.

Landlocked South Sudan split from Sudan in July, taking with it three quarters of the country’s oil, but all pipeline and export facilities are controlled by Sudan.

“This oil was indeed developed when Sudan was one country and therefore all of the Sudanese people need to reap the benefit of it,” al-Khatib said.

South Sudan accuses Khartoum of stealing $815 million worth of oil. Al-Khatib said that Juba had not paid it for using the refinery since South Sudan seceded.

“We started taking the equivalent in kind of what we had been invoicing South Sudan, not a cent more,” he said.

African Union mediators have proposed an initial deal calling on the two countries to reverse their unilateral decisions before inking a comprehensive agreement later.

The oil talks come ahead of an AU summit starting Sunday. Al-Khatib said he hoped they could sign the initial agreement soon.

South Sudan’s chief negotiator Pagan Amum on Friday said the negotiations had reached an “impasse because of the intransigence of the government of Sudan.”

“The mood of course was not good because you can imagine sitting with somebody who is stealing your property,” he said of Kiir’s and al-Bashir’s meeting.

Juba this week began to halt oil production after it ordered a complete shutdown over the dispute with Khartoum, with over half the wells now shut, the South says.

China, which relies on South Sudan for nearly five percent of its oil and is also a key ally of the Khartoum government, has been supporting negotiations between the two sides.

This week South Sudan signed an agreement with Kenya to build an oil pipeline to a Kenyan port, potentially freeing it from its dependence on exporting oil through Sudan.

However, industry experts have said that building a pipeline could take more than three years and cost as much as $4 billion — a staggering cost for the South, where oil production is already close to peaking.

South Sudan has also approached Ethiopia to build a pipeline connecting to the Red Sea state of Djibouti.

Earlier this month, South Sudan signed its first oil deals with foreign nations since its independence, inking agreements with Chinese, Indian and Malaysian firms.

The deals, which replace deals signed with Khartoum under a unified Sudan, cover oil production in the two key petroleum states of Unity and Upper Nile.

Khartoum also opened bids to international companies days after the South penned its deals.
After South Sudan gained its independence, Sudan, which also relies on oil, was scrambling for ways to bolster its finances.

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