Oil and South Sudan

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Oil is the chief source of income for the Republic of South Sudan and is a major export for the country. The country has to use the pipelines of Sudan in order to transfer oil shipments economically.

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Dispute with Sudan

The 2005 peace deal with Sudan allowed South Sudan to take away 2/3rd of Sudan's 500,000 barrels per day of oil production. However, South Sudan will have to pay Khartoum to use its oil pipeline and Red Sea port to sell the oil. However, the amount that is to be paid to Sudan is under dispute. On 20 December 2011, both Sudan and South Sudan have agreed to include international oil companies in talks to resolve the dispute. The talks are set to resume in January 2012.

In January 2012, South Sudan has ordered immediate shutdown of its oil production as Sudan has seized some of the oil transiting in the pipelines through its territory.

On January 30, 2012 Sudan has released four tankers loaded with South Sudanese oil in an attempt to diffuse the row over export transit fees of oil. However, South Sudan said that the move is not enough to reverse their decision to shut off their oil pipelines.

On February 1, 2012 South Sudan president, Salva Kiir Mayradit explains the reasons of his refusal to sign on a proposed deal with Sudan. He told fellow heads of state at the AU summit that the deal failed to comprehensively address the fundamental cause of the crisis. The deal was mediated by African Union High Level Panel (AUHIP) led by former South African President Thabo Mbeki. If the deal was signed, South Sudan would resume the oil production and Khartoum would receive $4 billion over the next five years as well as 35,000 barrels per day for the use of refineries.

MoU on construction of oil pipeline with Kenya

A Memorandum of Understanding (MoU) was signed by the Republic of South Sudan and Kenya to build oil pipeline from South Sudan to Port of Lamu in Kenya. This agreement is a positive development in the recent oil crisis and the dispute with its neighbor Sudan. The signing ceremony was held at J-One Palace in Juba. A high level delegation from Kenya led by Prime Minister Raila Odinga arrive Juba on 24th to negotiate the terms.South Sudan's President Salva Kiir Mayardit and Vice President, Dr. Riek Machar Teny were present during the signing ceremony. The Minister for Petroleum and Mining in South Sudan, Stephen Dhieu Dau and Kenya’s minister for Energy, Kiraitu Murungi, signed the MoU on behalf of their respective governments.

Construction of oil pipeline via Ethiopia

See Also: Lamu-Southern Sudan-Ethiopia Transport Corridor Project

The Republic of South Sudan entered into an agreement to construct an oil pipeline through Ethiopia to the port of Djibouti. The MoU was signed in February 2012. Information Minister Barnaba Marial Benjamin said, "We signed an agreement for another pipeline to go through Ethiopia and onto Djibouti. "The pipeline will be owned by the Government of South Sudan,". Chinese, American and European companies have shown interest in carrying out feasibility studies to construct the pipeline. The port of Djibouti is on the Gulf of Aden and the entrance to the Red Sea and is at least 1000km from South Sudan's oil fields.

Heglig oilfield

More Info: Heglig oilfield

South Sudan seized control of the Heglig oilfield on April 10, 2012. The Heglig oilfield is a disputed region between the two countries which produces about half of the South Sudan's 115,000-barrel-a-day oil output. Sudan has vowed to regain control of the region. Egypt's Foreign Minister Mohamed Kamel Amr arrived at Khartoum airport on April 15 for talks to diffuse the tensions between the two countries.

Related News

January 20, 2012: South Sudan orders immediate shutdown of oil production as Sudan seizes oil transiting its territory.
August 6, 2011: Port Sudan Authorities begins allowing South Sudan oil shipment to leave for its destination. There was a delay for several days over the issue of non-payment of custom duties. South Sudan Energy and Mining Minister Garang Diing Akuong, speaking to a media outlet confirmed this.
July 30, 2011: Minister Pagan Amum Okech announced that the Government of Sudan has withdrawn the discriminatory fees levied for using its oil infrastructure by South Sudan. The Minister addressed spoke with the press at the Juba International Airport soon after returning from Addis Ababa. He said that the two countries will hold consultations to come at a mutually beneficial terms.
July 27, 2011: South Sudan said it received a communication from North Sudan asking to pay $22.80 a barrel for oil transit via its pipelines. The South Sudan Government feels this is a 'clear declaration of economic war'. South Sudan produces around 500,000 barrels a day.
July 19, 2011: South Sudan President Salva Kiir Mayardit threatened saying that South Sudan will stop using the pipelines running through Sudan if the latter insists on sharing oil revenue as opposed to receiving transit fees.
  • He said, 'I am saying that we will rent the North’s oil pipelines and we will give them money for our oil to be transported, and we will of course pay and there is no problem'..'However, this offer is unaccepted by the North. We have agreed on one thing that the oil issue should not be disrupted. They [Sudan] need oil. But we fought for 21 years without oil and we can still go for 3 years until we build our own oil infrastructure'
July 18, 2011: South Sudan begins shipping oil for the first time as an independent nation. Director General for Energy in South Sudan, Arkangelo Okwang, said, 'We have already started shipping - we shipped 1m barrels today'. Okwang said that both shipments were of low-quality "Dar blend" from Blocks 3 and 7, which abut the border with the north, and were bought by Chinaoil.
July 2011: Li Zhiguo, charge d'affaires of the Chinese Embassy in South Sudan says China will seek oil cooperation with the new state. Sudan is the 6th supplier of oil to China. Li said, "We will respect the decision by the two sides and adjust our plans of cooperation accordingly"
July 10, 2011: Interior Minister Gen. Gier Chuang Along, speaking with the Angolan Secretary of State for Foreign Affairs, Manuel Augusto, says Angola tops list of cooperation in oil sector in the country.
July 12, 2011: Minister for Information Dr. Barnaba Marial Benjamin said that Nile Petroleum Company has formed a joint-venture with an international oil marketing company to market South Sudan's crude oil.

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