South Sudan wants more talks to end oil transit row
6 min readThu Feb 2, 2012 12:23pm EST
* Transit row worsening as countries try to disentangle oil industries
* South Sudan took three-quarters of oil when became independent
* Needs to pay for using pipelines and Port Sudan
JUBA, Feb 2 (Reuters) – President Salva Kiir said on Thursday South Sudan wants to end a row with Sudan over oil transit payments but has rejected a proposal requiring Juba to pay billions of dollars and keep exporting crude through the neighbouring country.
The two neighbours are locked in a worsening row over disentangling their oil industries after the South split from Sudan and became independent in July, following decades of civil war that ended with a peace deal in 2005.
The landlocked new nation took three-quarters of the oil production – the lifeblood of both economies – but needs to pay for using northern pipelines and the Red Sea port of Port Sudan.
Tension rose when Sudan said last month it started seizing southern oil as compensation for what it called unpaid pipeline transit fees. South Sudan responded last week by shutting down its entire output of 350,000 barrels a day.
On Friday, Kiir met Sudanese President Omar Hassan al-Bashir on the sidelines of an African Union (AU) summit to discuss oil but failed to reach a deal.
Kiir said he had rejected at the meeting a draft agreement by the AU because it would have required Juba to keep selling oil from some fields through Sudan’s export facilities.
“It is difficult for me to accept a deal that leaves our people vulnerable, dependent and paying billions they do not owe,” Kiir said, according to the text of his speech published by the government.
NEGOTIATIONS
The agreement would also have required South Sudan to supply 35,000 barrels a day to Sudan’s refineries, he said.
The value of the oil would be deducted from payments of $5.4 billion South Sudan also would have to make under the proposal to help Sudan cope with the loss of southern oil.
Kiir said the agreement had also not covered other conflicts such as marking the joint border and finding a solution for the disputed region of Abyei.
“I want to be clear that the Republic of South Sudan is committed to continue negotiations but we would also be wise to pursue efforts to enhance our economic self-sufficiency, prosperity and national security should we not find common ground with Khartoum for now,” he said.
South Sudan said last month it would build an alternative pipeline to Kenya within eleven months to end dependency on Sudan’s facilities.
But analysts are sceptical the project will take off because it would have to cross rough terrain and may not be viable.
Sudan accused South Sudan on Wednesday of being “hostile” towards Khartoum in the oil talks. (Writing by Ulf Laessing; Editing by Sophie Hares)
http://www.reuters.com/article/2012/02/02/sudan-south-oil-idUSL5E8D26M620120202
South Sudan’s Leader Rejects AU Proposal for Oil Deal With Sudan
South Sudanese President Salva Kiir said he rejected an African Union proposal to end an oil dispute with Sudan because it required the south to pay the north billions of dollars and use its pipelines to export crude.
Kiir, who held African Union-mediated talks with Sudanese President Umar al-Bashir on Jan. 27 in the Ethiopian capital, Addis Ababa, said the proposal required South Sudan to ship crude from certain oil fields through Sudan’s pipelines to the Red Sea.
“It is difficult for me to accept a deal that leaves our people vulnerable, dependent and paying billions they do not owe,” Kiir told reporters today in Juba, the capital. “This is an attempt to ensure that we do not build our own pipelines.”
South Sudan took control of about three-quarters of Sudan’s output of 490,000 barrels of oil a day when it gained independence in July. The crude is pumped mainly by China National Petroleum Corp. (CNPZ), Malaysia’s Petroliam Nasional Bhd. and India’s ONGC Videsh Ltd.
South Sudan completed a shutdown of oil production on Jan. 26 after accusing government in Khartoum of diverting oil to its refinery, forcing companies to load crude onto ships it controlled, and blockading other shipments. Sudan said it confiscated oil to cover unpaid bills.
South Sudan signed a memorandum of understanding with Kenya on Jan. 24 to build a pipeline to the Kenyan port of Lamu.
To contact the reporter on this story: Jared Ferrie in Juba, South Sudan atjferrie1@bloomberg.net
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