South Sudan pushes for completion of the Juba-Lamu pipeline

Posted: January 14, 2013 by PaanLuel Wël in Africa, Business, Business, Economy

By FRED OLUOCH, East-African Standard, Special Correspondent

South Sudan is pushing for the fast-tracking of the Juba-Lamu oil pipeline with construction set to start at the end of this month.

The plan is to complete the $5-6 billion pipeline within a year and a half and start pumping crude oil to the Lamu port for export before embarking on the construction of a refinery to be based in Isiolo.

Growing mistrust between Sudan and South Sudan has seen Juba pushing for the project, which should see it export crude oil.

Silvester Kasuku, Kenya’s secretary in charge of the Lamu Port-Southern Sudan-Ethiopia Transport (Lapsset) Corridor project at the Prime Minister’s office said the two countries are waiting for the signing of the Inter-Governmental Agreements between Kenya and South Sudan to signal the official start of the construction.

The Inter-Governmental Agreements include the development agreement, crude oil transport agreement and the crude oil pipeline agreement.

The 2,000 kilometre pipeline was initially scheduled to start in June. It will be used to transport between 700,000 to one million barrels of crude oil from South Sudan to other countries via the proposed Lamu Port, as an alternative route to Port Sudan.

Despite recent reports that presidents Omar al-Bashir and Salva Kiir had agreed to pull their troops 10 kilometres from the border, South Sudan chief negotiator, Pagan Amum later revealed that they are now concentrating on an alternative pipeline.

This was confirmed by South Sudan Ambassador to Kenya, Ngurduong Majok, who told The EastAfrican that the construction of the pipeline is set to begin soon, irrespective of whether or not Khartoum allows South Sudan to export oil through Port Sudan.

Mr Majok argued that South Sudan has discovered more oil beyond the capacity of the current pipeline passing through Khartoum.

The pipeline will be self-funding, meaning the developer will be allowed to recover the money through the sale of oil for an agreed period. But, Mr Kasuku said that South Sudan and Kenya are still negotiating on the process of identifying a developer.

Mr Kasuku said that 65 per cent of the Lamu port building is complete six months ahead of schedule. In the latest progress report dated January 4, the four-storey port building has reached the roofing stage.

The Kenya government will have to invest six per cent of its GDP or about 16 per cent of the annual government budget till the port’s completion in 2018.

Intervention needed

In the meantime, the stalemate between Sudan and South Sudan over the implementation of the economic and security agreements signed in Addis Ababa in September is likely to drag on for some time unless there is strong international intervention.

Mr Amum said that even if Sudan agrees to the resumption of oil exports, there is no guarantee that Khartoum will not come up with new conditions to stop the flow of oil.

Khartoum is demanding that South Sudan disarms the Sudan People’s Liberation Movement-North (SPLM-N), which has launched a rebellion in Northern Kordofan and Blue Nile states, before it can allow the resumption of oil exports through its pipeline.

South Sudan insists it severed ties with the rebels three months before independence in July 2011, with Mr Majok arguing that Southern Kordofan and Blue Nile are in Sudan and they cannot be expected to disarm rebels in the territory of another country.

But, he remained positive that there will be a solution.

“We trust that since the two presidents agreed to fully implement the September agreement, we are relying on their goodwill, especially that of President al-Bashir who has recommitted himself to the implementation. We have to remain optimistic,” said Mr Majok.

Osman Hassan, the Sudanese Deputy Ambassador to Kenya maintained that President Kiir had in September signed an agreement to delink South Sudan from SPLM-N and it has to be effected to allow the implementation of other issues like oil exports and security arrangements.

While noting that the recent summit in Addis Ababa was a major success when the two countries agreed to establish a demilitarised zone, he denied claims that Sudan is seeking to replace former South African president Thabo Mbeki as head of the negotiations.

“Vice-president, Ali Osman Taha has been touring many countries like Kenya, Zimbabwe, South Africa and Lesotho for confidence building. Sudan has been resisting a move by South Sudan to hand over the negotiations to the Intergovernmental Authority on Development (Igad).

“African mediators must see the negotiations to their conclusion because a new mediator will take time to understand the issues and we might even lose what we have achieved so far,” said Mr Osman. 

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