South Sudan Says Sudan Blocking Oil Exports, Diverting Crude Via Pipeline
6 min readSouth Sudan accused Sudan of blocking 3.4 million barrels of its oil exports and said the northern neigbor is also seeking to divert the flow of some of its crude by building a new pipeline.
Fuel shipments have been held up in international waters in the Red Sea since Dec. 22 and an oil-laden vessel scheduled to leave on Jan. 4 has been stopped from leaving Port Sudan, Oil Minister Stephen Dhieu Dau told reporters today in Juba, the capital. Sudan also started building a “tie-in” pipeline between PetroDar Operating Co.’s eastern pipeline and two oil refineries in Sudan to divert 13 percent of Dar blend crude, he said.
“We will take all the necessary legal actions against Khartoum and buyers of crude or refined oil that is stolen from South Sudan,” he said. Sudan Foreign Ministry spokesman al-Obeid Murawih didn’t answer his mobile phone when called for comment.
A dispute between the two countries erupted in November when South Sudan said Sudan blocked shipments purchased by China International United Petroleum & Chemical Corp. and Geneva-based Vitol SA. China publicly urged the two sides to reach an agreement that would ensure the flow of oil and sent its top African envoy, Liu Guijin, to the capitals of both nations on Dec. 7 and Dec. 8 for talks with officials.
South Sudan assumed control of about three-quarters of Sudan’s output of 490,000 barrels a day when it seceded on July 9 after an independence referendum. Talks since then have failed to yield an agreement on the amount landlocked South Sudan will pay to transport its oil through a pipeline across Sudan.
Letters of Complaint
Dau said the “tie-in” pipeline being built by Sudan will be ready to connect to the main PetroDar pipeline by Jan. 15. PetroDar wrote letters of complaint to Sudan and South Sudan after being requested by Khartoum to connect to the tie-in pipeline, Dau said.
“They rejected it as an illegal action,” he said.
British Virgin Islands-registered Petrodar’s shareholders include state-owned China National Petroleum Corp. (CNPZ), Malaysia’s Petroliam Nasional Bhd (PET) and the government-controlled Sudan Petroleum Co., according to its website. Calls to a number listed on the website didn’t connect and the company didn’t immediately respond to an e-mailed request for comment.
Juba and Khartoum failed to reach an agreement on the oil dispute in talks during December. Further African Union- sponsored negotiations are scheduled to take place on Jan. 17 to Jan. 21 in Addis Ababa, the capital of Ethiopia. Dau said his government invited the oil companies to sit in on the talks.
Chinese Visit
A delegation that will include Chinese oil executives is scheduled to arrive in Juba on Jan. 13, he said. During the visit, the companies will sign new exploration and production sharing agreements with the government for three blocks, while contract negotiations continue for three additional blocks. Since independence, Juba has been negotiating new contracts with oil companies, as previous ones were signed with the Khartoum government.
Dau told reporters that Sudan ordered foreign oil companies to divert all of South Sudan’s Nile blend crude entitlements for December to the Khartoum and el-Obeid refineries. He also accused the Sudanese government of ordering 550,000 barrels of South Sudan’s Dar blend crude entitlement to be delivered to a Sudanese buyer, whom he didn’t identify.
To contact the reporter on this story: Jared Ferrie in Juba at jferrie1@bloomberg.net.
To contact the editor responsible for this story: Paul Richardson atpmrichardson@bloomberg.net.
South Sudan says Sudan blocking its oil exports
By Hereward Holland
JUBA | Wed Jan 11, 2012 12:15pm EST
Jan 11 (Reuters) – South Sudan has accused the Sudanese government of blocking 3.4 million barrels of its crude oil exports, diverting over half a million barrels to its refineries and building a pipeline to keep diverting its oil.
Six months after landlocked South Sudan seceded from Sudan, the two countries have failed to agree on how much Juba should pay Khartoum in fees to transport its production of 350,000 barrels per day to port.
South Sudan’s minister of petroleum and mining, Stephen Dhieu Dau, said Sudan was re-routing all of the new nation’s Nile Blend crude oil entitlements for December to refineries in El Obeid and Khartoum.
“Any diversion of (South Sudan’s) oil without its consent is nothing less than theft, and preventing crude oil from leaving port is unlawful and a violation of international laws and norms,” Dhieu Dau said in a statement obtained by Reuters on Wednesday.
The Sudanese foreign ministry could not be reached for comment. President Omar Hassan al-Bashir said this month Khartoum would impose a fee on Juba until a deal was reached on a transit fee but gave no details.
Already tense relations between the two nations soured in November when South Sudan accused Sudan of temporarily seizing 1.6 million barrels at Port Sudan. Sudan threatened to take 23 percent of South Sudan’s oil exports as payment in kind until a final deal.
Dhieu Dau said Khartoum had sold over half a million barrels of South Sudanese oil to an undisclosed Sudanese buyer and had started construction of a pipeline that would permanently deliver 13 percent of the South’s Dar blend to refineries in Khartoum.
Analysts say Khartoum needs to keep supplying oil to its refineries or risk damaging its facilities because of the nature of the crude.
Dhieu Dau charged Khartoum with preventing two ships carrying 1.6 million barrels of South Sudanese oil from leaving Port Sudan, another from loading 0.6 million barrels and two others from entering port to take possession of a further 1.2 million barrels.
Companies that buy crude from Sudan while the South’s oil is being stolen “will enjoy no further business with the Government of South Sudan”, he said.
“South Sudan further reminds Khartoum that the 1.6 million barrels of Dar Blend, now loaded onto ships, no longer belongs to South Sudan,” Dhieu Dau said.
South Sudan voted overwhelmingly for independence in a referendum a year ago, the culmination of a 2005 peace deal that ended decades of civil war in which over 2 million people died.
Dana Wilkins from Global Witness, which investigates transparency in extractive industries, said the delays and penalties incurred by the shipping companies could become very expensive if the situation is not resolved swiftly.
“Shaking investor confidence in an already uncertain context is a big move for Khartoum to be making right now,” Wilkins said. (Reporting by Hereward Holland; Editing by Ulf Laessing and Jane Baird)
http://www.reuters.com/article/2012/01/11/sudan-south-oil-idUSL6E8CB59Y20120111
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