Sudan reportedly blocks South’s oil shipment
8 min readSudan halts South Sudan oil shipment
Sudan has blocked a shipment of southern oil after Juba refused to pay customs fees, the foreign ministry said, escalating a row in which the south accuses Khartoum of sabotaging its economy.
“Sudan has blocked the ship in Port Sudan … When the ship leaves the port, the south has to pay the customs authorities. This is the first time they didn’t pay,” foreign ministry spokesman Al-Obeid Meruh said.
Earlier, he had said the 600,000 barrel crude cargo had been blocked because the Juba government refused to pay the north’s fees for the use of all its oil infrastructure, including its pipeline, refinery and Red Sea port, which is the south’s only export terminal.
Mr Meruh confirmed no agreement had yet been reached between north and south on transit fees, one of the most sensitive of Sudan’s various unresolved issues, following the formal independence of the south on July 9.
He said Khartoum was asking for $32 dollars per barrel.
The ministry of energy and mines in South Sudan, from which 80 per cent of the divided country’s total oil production of 470,000 barrels per day is pumped, accused Khartoum of delaying the negotiations to squeeze the south.
“They want to stop the shipment so that it prolongs the whole process. Khartoum is trying to sabotage the economy of South Sudan,” the ministry’s undersecretary, David Loro, said.
He said a committee of southern officials was currently in Khartoum working to reach an agreement with the Sudanese government on the question of transit fees.
South Sudan sold its July-lifting oil independently, for the first time, at international prices and apparently without interference from Khartoum, shipping around 3.2 million barrels from Port Sudan.
Since then, however, South Sudan’s chief negotiator, Pagan Amum, has warned Khartoum against starting “economic wars” over currency and oil transit fees, and has said the charges that it had imposed amounted to “daylight robbery.”
He said Sudan should set its transit fees according to “international standards,” and cited the figure of $1.8 a barrel charged by other states with similar arrangements, reflecting how far apart the two sides are on the issue.
North and South Sudan both depend heavily on their oil receipts, with Khartoum’s cash-strapped government desperate to offset its loss of southern oil revenues, which represented some 36 per cent of its income prior to partition.
Just weeks before the south seceded, Sudan’s President Omar al-Bashir threatened to deny the landlocked south access to the north’s oil infrastructure if no deal was reached.
The World Bank, meanwhile, warned last month that the Juba government urgently needed to develop the new nation’s agricultural sector to lessen its reliance on oil, which accounts for more than 95 per cent of its total revenues.
Sudan halts southern oil shipment
By Ulf Laessing and Hereward Holland
KHARTOUM/JUBA | Fri Aug 5, 2011 4:11pm EDT
(Reuters) – North Sudan has halted an oil shipment from landlocked South Sudan in a dispute over customs fees, it said on Friday, signaling a rise in tensions that could disrupt supplies from one of Africa’s largest producers.
For use of its oil facilities, North Sudan has demanded fees worth a third of the export value of South Sudan, which became independent last month, after a referendum in January agreed under a 2005 peace deal that ended decades of civil war.
The halting of a 600,000 barrels crude cargo in Port Sudan signals mounting tensions over how to share oil revenues.
The South took 75 percent of the country’s 500,000 barrels a day of oil production, Africa’s fifth largest. But it depends on the North to use the only cross-border pipeline to the Red Sea outlet of Port Sudan to sell the oil.
On Friday, customs authorities in Port Sudan stopped one shipment because duties had not been paid, a spokesman for the foreign ministry in Khartoum said without giving other details.
“Customs asked for the fees to be paid. They paid last time but not this time,” the spokesman said.
He said the action had been the decision of the customs authorities and was not related to current talks between North and South about sharing oil revenues.
The two sides have failed so far to reach an agreement on a transit fee to be paid by the South. Until now both split equally the oil, the lifeline of both economies.
Khartoum is asking for $32 a barrel to use its port, the pipeline and refineries to sell the southern oil, the spokesman said. This is worth roughly a third of South Sudan’s export value at current prices. according to Reuters calculations.
“This has to be negotiated. There is no agreement yet,” he said, adding that other proposals such as a fixed sum instead of a transit fee were being discussed.
A South Sudan official sought to ease the oil tensions.
“We don’t interpret this as a rejection by Khartoum. I do not think this is politically motivated,” said David Loro Gubek, undersecretary at the ministry of energy and mining in Juba.
“There are certain procedures at the port that have to be followed. We will wait for clarification tomorrow.”
Tensions had seemed to have eased at the end of last month when South Sudan said it saw progress in oil sharing talks with the North only a week after accusing it of waging economic war by demanding a very high pipeline transit fee.
Last month, the northern parliament approved an alternative 2011 budget that lawmakers said included an annual income of $2.6 billion for transit fees — the same amount expected for the loss of southern oil production.
Refineries are located only in the North. Experts say southern plans to connect to a pipeline in east African neighbor Kenya are years away.
Analysts say Sudan has had little transparency for years about how oil revenues are booked. The country has endured conflict, inflation, corruption and U.S. trade sanctions.
Apart from sharing oil revenues, both sides need to end violence in some parts of their shared border and need to divide up other assets and debt.
Some 2 million people died in Sudan in a decades-long conflict over religion, ethnicity, ideology and oil, although the secession last month was very peaceful.
Sudanese oil flows mainly to Asia, with China buying more than a half of total volumes. South Sudan’s production is dominated by Chinese and Indian companies, which have been marketing their crude themselves so far.
Last month, South Sudan also signed a deal with trading house Glencore to help it market crude but a dispute between various officials has threatened to derail the agreement.
(Writing by Dmitry Zhdannikov; Editing by Anthony Barker and David Gregorio)
Sudan reportedly blocks South’s oil shipment
August 4, 2011 (KHARTOUM) – A shipment of oil produced in South Sudan has been prevented from leaving Port Sudan for dispute over fees, an official in Juba said today.
- Sudan’s new currency sits behind a window at the central bank in Khartoum, Sudan (AP)
Garang Deng, South Sudan’s oil minister, said that the oil tanker contained 600,000 barrels and that Port Sudan authorities refused to let it proceed to its destination unless it service fees are paid upfront.
“We have failed to reach solutions with the government of Sudan that would guarantee that the ship would depart at the specified time,” Deng said.
“I have contacted the finance and energy ministers of the Northern government but they refused to talk about it on the pretext that they have meetings” he added.
The South Sudan official warned that shipment delay could inflict penalties on Juba according to the terms of the contract with the buyers. He provided no details on who the sale was made to or the price.
The oil-rich nation became an independent state last month after its citizens voted almost unanimously in favor of secession from the Arab-Muslim dominated north. But the latter contains the infrastructure and pipelines that transports the oil from the landlocked South to Port Sudan.
Both sides are still negotiating the transit fees to be assessed per barrel for usage of the pipelines. The figures proposed by Khartoum initially were called “daylight robbery” by Juba.
South Sudan officials have threatened to seek other venues to export their oil and rejected any revenue sharing arrangement similar to the one that was in place prior to July 9th.
The first oil shipment containing 1 million barrels was made in July out of Port Sudan without any issues.
But many observers believe that there are mounting signs of an economic warfare between the two countries.
In recent weeks Khartoum and Juba traded accusations over the almost simultaneous introduction of new currency in the two countries.
The ruling National Congress Party (NCP) in Sudan said that the South breached an understanding that the North and South would maintain one currency for an interim period of at least six months.
Furthermore, the situation got more tense after Sudan said it rejected a request from the South that old Sudanese pound in circulation in the new country be exchanged with foreign currency or used in bilateral trade.
It is estimated that $700 million worth of old Sudanese pound is circulated in South Sudan. Khartoum said it has taken measures to prevent the old notes from being sneaked from their Southern neighbor.
This week, the Central Bank of South Sudan reduced the window for exchanging the old Sudanese pound from 90 days to 45. The North on the other hand said banks would open once again over the Friday-Saturday weekend to allow citizens to get new notes to “speed up” the process.
While the South would be hit if the old pound it had bought for dollars in the run-up to independence would be worthless, there is also a risk for the north: If the south tried exporting old notes back there it would add to inflationary pressures.
(ST)
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