Sudan says Khartoum released blocked oil cargo
6 min readAug 6 (Reuters) – North Sudan has released a 600,000 barrel oil shipment of landlocked South Sudan held over failed customs duties, a southern official said on Saturday as both sides argue over dividing oil revenues.
On Friday, Khartoum said it had stopped the crude cargo at the outlet of Port Sudan because South Sudan failed to pay customs duties, the latest in oil tensions between the two countries.
South Sudan took most of the country’s oil production of 500,000 barrels of oil when it became independent on July 9 as part of a 2005 peace deal that ended decades of civil war with the north. Oil is the lifeline of both economies.
The South needs northern refineries, the only Red Sea port in Port Sudan and pipeline to sell the oil but both sides have failed so far to agree on usage fees in a row that could disrupt supplies from one of Africa’s largest producers.
“Now the shipment has left, the 600,000 barrels,” David Loro Gubek, undersecretary at the southern ministry of energy and mining in Juba, told Reuters.
He confirmed that Khartoum had demanded a fee for future use of northern oil facilities of around $32 a barrel which would amount to a third of the export value of South Sudan, according to Reuters calculations based on current prices.
Until now both split equally the oil.
South Sudan had asked the African Union (AU), which is sponsoring bilateral talks in Ethiopia, to find a compromise after rejecting the $32 proposal, Gubek said.
“So, the African Union has not decided what is the correct amount to pay. Now I think our president talked to (northern president) Omar (Hassan) Al-Bashir so that whatever decision the AU gives, then the Republic of South Sudan will pay.”
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 neighbour 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 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 crud, but a dispute between various officials has threatened to derail the agreement. (Writing by Ulf Laessing; Editing by Susan Fenton)
Sudan releases South’s oil shipment
August 6, 2011 (KHARTOUM) – The authorities in Port Sudan have allowed an oil shipment to leave for its destination after several days of delay over the non-payment of custom duties.
- South Sudan’s Minister of Energy and Mining Garang Deng (AFP)
The oil cargo belonged to the newly independent state of South Sudan which has no way to export its oil except through the pipelines that run through its northern neighbor.
“We have made consultations with Khartoum and at the end of the day yesterday [Friday] the shipment that was detained sailed to its destination,” South Sudan Energy and Mining Minister Garang Deng told Agence France Presse (AFP) in an interview.
He did not say how much South Sudan had to pay so that Khartoum unblocks the shipment. Juba said this week that it could incur penalties in the event that they miss the delivery date specified in the contract with the buyer.
The two countries are grappling over much South Sudan should pay for using the oil infrastructure in Sudan.
Khartoum has proposed at least $22.8 per barrel which was labeled as “daylight robbery” by Juba. The latter said afterwards that Sudan dropped this figure.
Both sides are negotiating this item under the auspices of an African Union (AU) panel headed by former South African president Thabo Mbeki. Little progress has been made so far in breaking the deadlock on pricing the transit fees.
“Currently the oil negotiations are stalled. This is because NCP [Sudan’s ruling National Congress Party] are demanding what they call financial transitional arrangements, in which they are asking a sort of contribution of wealth sharing” Deng said.
“We are ready to assist Khartoum in recovering its economic loss… [But the government] is asking us to pay 32 dollars per barrel from the oilfield up to Port Sudan. We are saying that this is too high,” he added.
Last month, Sudan’s 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 South Sudan’s oil production.
South Sudan officials have threatened to seek other venues to export their oil and rejected any revenue sharing similar to the one that was in place prior to July 9th.
(ST)
By Waakhe Simon (AFP)
JUBA — South Sudan’s oil minister said on Saturday that an oil cargo detained by northern officials in Port Sudan in a row over duty payments had now sailed, but that negotiations over transit fees were stalled.
“We have made consultations with Khartoum and at the end of the day yesterday (Friday) the shipment that was detained sailed to its destination,” Energy and Mining Minister Garang Diing told AFP in an interview.
The foreign ministry in Khartoum confirmed on Friday that the authorities in Port Sudan, the landlocked south’s only export terminal, had blocked a 600,000-barrel southern oil cargo after Juba refused to pay customs duties.
The move threatened to seriously escalate a growing row between the two sides since southern independence last month, with Juba accusing Khartoum of trying to sabotage its economy.
Diing did not indicate whether, or how much, the south had paid to have the cargo released, but said his ministry was marketing South Sudan’s oil itself, which was going “very well” except for problems sometimes caused by the issue of transit fees.
A foreign ministry spokesman in Khartoum said on Friday that no agreement had yet been reached between north and south on transit fees, one of the most sensitive of divided Sudan’s unresolved issues, and that Khartoum was asking for $32 per barrel.
The energy minister said the north’s demands had blocked the talks.
“Currently the oil negotiations are stalled. This is because NCP (the ruling National Congress Party) are demanding what they call financial transitional arrangements, in which they are asking a sort of contribution of wealth sharing.
“We are ready to assist Khartoum in recovering its economic loss… (But the government) is asking us to pay 32 dollars per barrel from the oilfield up to Port Sudan. We are saying that this is too high,” Diing said.
He added that, despite the African Union’s efforts to narrow the gap between the two parties, it was unlikely the talks would be finalised by the end of September, as the south’s chief negotiator Pagan Amum had said late last month.
North and South Sudan both depend heavily on their oil receipts, with Khartoum’s cash-strapped government desperate to offset the loss of southern oil revenues, estimated at around 36 percent of its total income.
Just weeks before the south seceded, President Omar al-Bashir threatened to deny Juba access to the north’s oil infrastructure — its pipelines, refinery and export terminal — if no deal was reached prior to partition.
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