KHARTOUM (Reuters) – South Sudan’s plans to build a pipeline to Kenya or Djibouti to end dependency on Sudan’s oil industry seems unrealistic in the short-term, showing the need to find a deal with Sudan over oil payments, a Norwegian minister said on Wednesday.
South Sudan is locked in a row with Sudan over oil payments because it needs to ship its crude through northern pipelines and a Red Sea port.
Last month, Juba shut down its entire oil output of 350,000 barrels per day after Sudan started seizing southern oil after both sides failed to agree on a transit fee.
Juba now wants to develop an alternative pipeline to Kenya or Djibouti to bypass Sudan.
But Norway’s Minister for Environment and International Development, Erik Solheim, said oil pipeline projects tend to take longer than planned.
“I see very few people in the international community who consider this feasible in the short-term,” Solheim told Reuters.
“A much more realistic option would be to find a settlement using the north-south pipeline in meantime while then you can consider a long-term solution,” he said during a visit to Khartoum.
Norway is advising Sudan and South Sudan on developing their oil industries.
Asked whether Juba would be able to build a pipeline to the Kenyan coast within 11 months as planned, Solheim said: “It’s a very optimistic assessment.”
Apart from Kenya, Juba has also signed a memorandum of understanding with Djibouti and Ethiopia to build another pipeline. No companies have been named yet for either project.
North and south resume talks sponsored by the African Union on March 3 but Solheim sounded sceptical on a breakthrough.
“Both sides say they are ready to compromise but there is not huge optimism,” he said, warning: “It’s a very serious issue for both sides, especially the south.”
South Sudan’s budget depends for 98 percent on oil revenues.
Positions of both sides are wide apart. The South wants to pay around $1 a barrel in transit fees, Khartoum demands around $36 a barrel plus back payments of $1 billion.
South Sudan in talks with Vitol to build small Refinery in South Sudan
By Hereward Holland and Emma Farge
PALOUGE OIL FIELD, South Sudan/LONDON (Reuters) –
South Sudan is in talks with top oil trader Vitol to build a small refinery which would start producing in 2013, as it seeks to end dependency on Sudan, its oil minister said on Tuesday.
South Sudan took three-quarters of Sudan’s oil production when it became independent in July but has no refineries and needs to import petrol from Sudan or East African neighbours.
The landlocked country is in a dispute with Sudan over oil payments, as it needs to export its crude through northern export facilities. It has shut down its entire output of 350,000 barrels a day after Sudan started seizing southern oil for what it calls unpaid transit fees.
“We are expecting the first product in 2013,” Oil Minister Stephen Dhieu Dau told Reuters during a visit to Palouge oil field when asked about refinery talks with Vitol.
“They will use 10,000 barrels per day and the output will be 35-40 percent of the total so it will be 3,500 barrels per day initially and then we will develop it gradually,” he said.
South Sudan planned two more small refineries, he said without giving details.
Vitol’s Chief Executive Ian Taylor told Reuters talks have been held with Juba.
“The South Sudanese are interested themselves in creating some finished products which they don’t have much of. They have talked to us and not just us,” he said.
“They have got a problem with refining products on how to bring them in. What they’ve got is crude oil, sadly stuck in the ground,” he said.
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