Sudan, South Sudan End Talks on Oil Dispute Without Accord
9 min readJanuary 27, 2012, 2:00 PM EST
By William Davison and Paul Richardson
Jan. 27 (Bloomberg) — South Sudan’s president, Salva Kiir, and Sudanese leader Umar al-Bashir failed to reach an agreement to end an oil dispute between the two countries that led South Sudan to start shutting down its crude production.
The negotiations are expected to continue at the Jan. 29-30 summit of the 54-nation African Union in Addis Ababa, Ethiopian Prime Minister Meles Zenawi told reporters today in the capital.
“In general terms I believe there is quite a lot of progress, but not enough for us to be able to clinch a deal now,” Meles said. The failure of the talks means South Sudan’s shutdown of oil production will continue, he said.
South Sudan has accused Sudan of seizing oil that passes through its territory to an export terminal on the Red Sea and has demanded $32 a barrel in transportation fees. South Sudan offered $1 a barrel. Sudan says it is diverting the crude to cover unpaid bills. Kiir said on Jan. 23 Sudan has “looted” $815 million worth of his country’s oil.
South Sudan took control of about three-quarters of Sudan’s output of 490,000 barrels a day when it gained independence from its northern neighbor in July. The crude is pumped mainly by China National Petroleum Corp., or CNPC, Malaysia’s Petroliam Nasional Bhd. and India’s ONGC Videsh Ltd.
The talks came after the African Union submitted a proposal, backed by the U.S. and China, to both leaders suggesting ways to end the dispute.
Chinese Imports
China imported about 250,000 barrels a day, or more than 65 percent of total Sudanese oil exports, accounting for 5 percent of the nation’s imports in 2010, according to data from the U.S. Energy Department.
South Sudan said on Jan. 25 that it has stopped output at more than 300 wells and there is “reduced production” at 600 more, cutting production to about 135,000 barrels per day from 275,000 barrels previously.
South Sudan’s “unilateral decision” to halt production “can only be stopped if there is an agreement,” Meles said.
The shutdown of output so far in South Sudan may have halted CNPC-operated production in Unity state, equivalent to about 150,000 barrels per day, Philippe de Pontet, Africa Director at New York-based Eurasia Group, said in a research report yesterday.
South Sudan’s chief negotiator at the talks, Pagan Amum, said the shutdown of the country’s output would be completed by tomorrow. Any agreement with Sudan would depend on the release of detained vessels ferrying “stolen” South Sudanese oil, and compensation for the siphoned crude, he said.
Once an agreement is reached, it will take about a week to bring production back to pre-shutdown levels, Amum said.
South Sudan says its government depends on oil for about 90 percent of its revenue.
–Editors: Karl Maier, Emily Bowers
To contact the reporters on this story: William Davison in Addis Ababa at wdavison3@bloomberg.net; Paul Richardson in Nairobi at pmrichardson@bloomberg.net
To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net
South Sudan oil shutdown continues after talks fail
1:02 p.m. CST, January 27, 2012
However, the source said the talks broke down when Kiir pulled out.
Ethiopian Prime Minister Meles Zenawi, who chaired the East African meeting, said the two had agreed to sign a deal even though they had reservations on numerous points, according to the source.
“Then Salva said, ‘I regret to say that my delegation is still discussing the deal and I can’t sign’,” the source said.
South Sudan seceded in July under a 2005 peace deal that ended decades of civil war with Khartoum. It took with it about 75 percent of roughly 500,000 barrels per day of oil production.
Both countries depend heavily on oil and have put forward widely differing figures for a possible transit fee. Sudan has publicly proposed $36 per barrel, while South Sudan has listed figures under $1 per barrel.
The dispute heated up this month when Sudan said it was confiscating some oil exports from South Sudan to make up for what it called unpaid fees. In response, South Sudan said on January 20 it was shutting down its output.
WELLS SHUT DOWN
South Sudan’s oil minister Stephen Dhieu Dau said Friday that his country was continuing to shut down its oil output in protest at Sudan seizing part of its oil shipments.
“Now 50 percent of the wells are off,” he told reporters during a visit to the Palouge oil field in Upper Nile state. However, he did not say whether he was referring to the whole country or Upper Nile fields only.
In a sign of continuing acrimony, Dau also said Khartoum may have been diverting some oil from the fields which lay on the southern side of the border to feed its refinery in Khartoum. There was no immediate response to the accusation from Sudan.
An official at Petrodar, a consortium of mainly Chinese and Malaysian firms that produces much of South Sudan’s oil output, said the company had shut down around 250 of its wells, and expected to finish the shutdown in three days.
“The progress is going very smoothly and safely. The program is expected to finish in three more days,” Hago Bakheed Mahmoud, field operation manager for Petrodar, told reporters.
Petrodar was still pumping between 145,000 and 150,000 barrels per day and could resume its operations within three to four days if it was given instructions to do so, he added.
TALKS COLLAPSE
The negotiations that could lead to a reversal of the shutdown “have reached an impasse,” South Sudan’s chief negotiator Pagan Amum told reporters in Addis Ababa.
“The mood was not good because imagine you’re sitting with someone that’s stealing your property,” he said, adding the South’s output would cease by Saturday and that only cleaning and flushing the facilities would remain after that.
Sudan’s negotiators did not immediately comment.
Ethiopian leader Meles said the two sides hadn’t agreed on a deal yet, but oil would stay on the agenda in Addis Ababa, where the leaders of Somalia, Kenya and Ethiopia also met.
“It was agreed that the two parties will continue their negotiations during the summit. We have not come to conclusion as yet,” he told reporters.
Meles said an African Union mediating panel had proposed a “reversal of unilateral measures” taken by both sides, but did not spell out what that meant. “Many of those issues are agreed, but there are some sticking points,” he said.
According to oil industry sources, Sudan has already sold at least one cargo of crude seized from South Sudan at millions of dollars discount, and is offering more.
Sudan’s civil war was fought for most years from 1955 to 2005 over issues of ethnicity, religion, ideology and oil. An estimated 2 million people died in the conflict.
Southerners voted overwhelmingly to secede in a referendum held last year in January.
(Reporting by Aaron Maasho and Yara Bayoumy; Additional reporting by Hereward Holland in Palouge; Writing by Alexander Dziadosz; Editing by David Stamp)
Sudan, South Sudan Oil Talks End Without Agreement
LONDON (Dow Jones)–Negotiations between Sudan President Omar al-Bashir and South Sudan President Salva Kiir to resolve a long-standing dispute of oil transit fees ended without agreement, David Kong, deputy of mission at South Sudan’s embassy in Ethiopia, told Dow Jones Newswires on Friday.
“No agreement was reached, but our president says negotiations will continue,” Kong said, adding that South Sudan would go ahead with its plans to shut down oil production.
The meeting, which took place in the Ethiopian capital of Addis Ababa on Friday, marked the latest attempt to negotiate an agreement between the two sides in a long-standing dispute over oil transit fees.
South Sudan split from Sudan in July, taking with it some 75% of the former country’s oil production. However, South Sudan lacks the infrastructure to export the oil and has been left dependent on pipelines that flow through Sudan.
The neighbors have been unable to agree on a suitable fee for the use of these pipelines, and the resulting dispute has become increasingly tense, causing severe disruptions to South Sudan’s oil exports.
-By Sarah Kent, Dow Jones Newswires; 44 20 7842 9376; sarah.kent@dowjones.com
http://online.wsj.com/article/BT-CO-20120127-712921.html
Sudan, South Sudan leaders fail to reach oil deal
By Yara Bayoumy and Aaron Maasho
ADDIS ABABA (Reuters) – The presidents of Sudan and South Sudan failed on Friday to resolve an oil dispute that has led to the shutdown of the South’s crude output and threatened both countries’ economies.
The row centres on how much landlocked South Sudan, which became independent last year, should pay to send its oil exports through Sudan to a Red Sea port.
Sudanese President Omar al-Bashir, using a walking stick, and South Sudan’s President Salva Kiir met on the sidelines of a meeting of East African officials in Ethiopia.
The two discussed a deal that “would have frozen the situation and reverses the unilateral actions that had been taken by both”, a source close to the talks told Reuters.
However, the source said the talks broke down when Kiir pulled out.
Ethiopian Prime Minister Meles Zenawi, who chaired the East African meeting, said the two had agreed to sign a deal even though they had reservations on numerous points, according to the source.
“Then Salva said, ‘I regret to say that my delegation is still discussing the deal and I can’t sign’,” the source quoted Zenawi as saying.
South Sudan seceded in July under a 2005 peace deal that ended decades of civil war with Khartoum. It took with it about 75 percent of roughly 500,000 barrels per day of oil production.
Both countries depend heavily on oil and have put forward widely differing figures for a possible transit fee. Sudan has publicly proposed $36 per barrel, while South Sudan has listed figures under $1 per barrel.
The dispute heated up this month when Sudan said it was confiscating some oil exports from South Sudan to make up for what it called unpaid fees. In response, South Sudan said on January 20 it was shutting down its output.
WELLS SHUT DOWN
South Sudan’s oil minister Stephen Dhieu Dau said on Friday that his country was continuing to shut down its oil output in protest at Sudan seizing part of its oil shipments.
“Now 50 percent of the wells are off,” he told reporters during a visit to the Palouge oil field in Upper Nile state. However, he did not say whether he was referring to the whole country or Upper Nile fields only.
Zenawi said the two sides hadn’t agreed on a deal yet, but oil would stay on the agenda in Addis Ababa, where the leaders of Somalia, Kenya and Ethiopia also met.
“It was agreed that the two parties will continue their negotiations during the summit. We have not come to conclusion as yet,” he told reporters.
Zenawi said an African Union mediating panel had proposed a “reversal of unilateral measures” taken by both sides, but did not spell out what that meant. “Many of those issues are agreed, but there are some sticking points,” he said.
According to oil industry sources, Sudan has already sold at least one cargo of crude seized from South Sudan at millions of dollars discount, and is offering more.
Sudan’s civil war was fought for most years from 1955 to 2005 over issues of ethnicity, religion, ideology and oil. An estimated 2 million people died in the conflict.
Southerners voted overwhelmingly to secede in a referendum held last year in January.
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