NAIROBI, Kenya, Jan 25 – Kenya and South Sudan have signed an agreement that will allow for construction of an oil pipeline to the port town of Lamu.
The deal was signed in Juba on Tuesday by Energy Minister Kiraitu Murungi and Stephen Dhieu, the South Sudanese Minister for Petroleum and Mines.
The signing was witnessed by South Sudanese President Salva Kiir, Prime Minister Raila Odinga, Foreign Affairs Minister Moses Wetangula and Public Service Minister Dalmas Otieno.
“The pipeline will be developed through Kenyan territory and will be built and owned by South Sudan. The two countries will negotiate and agree on transit fees for the oil pipeline,” a dispatch from the Prime Minister’s office said.
Kenya has already embarked on a major plan to construct a modern port in Lamu as well as road and railway networks linking Lamu to South Sudan and Ethiopia.
The project, dubbed Lamu Port-South Sudan-Ethiopia Transport Corridor (LAPSSET) is to serve as the entry point of goods for Ethiopia and South Sudan.
It is budgeted at $23 billion of which the Lamu port is earmarked to cost $5.3 billion.
South Sudan, which has vast oil resources, became an independent state last July after a referendum in which its citizens voted to part ways with the north.
The land-locked south produces two-thirds of the former unified Sudan’s oil output. The two countries are however locked in a dispute over transit fees for use of the pipeline which terminates at the Red Sea port of Port Sudan.
The conflict hit a crescendo on Monday when South Sudanese President Salva Kiir ordered a complete production shutdown after accusing Sudan of stealing $815 million of crude oil.
“The crisis has reached a stage that is unacceptable,” Kiir told Parliament on Monday.
Khartoum has admitted to taking some South Sudanese oil destined for export as compensation until an agreement, but the South has said this is theft.
Kiir is due to meet Sudanese President Omar al-Bashir Friday in Addis Ababa, Ethiopia, where the African Union has been mediating talks.