Crude dispute
January 21, 2012
UN Secretary-General Ban Ki-moon on Friday raised concern over what he termed a "worrying deterioration" in relations between Sudan and South Sudan barely six months after their separation.
UN spokesman Marty Nesirky said, "The secretary-general strongly urges the parties to do everything possible to reach agreement" at Africa Union brokered talks in Ethiopia "to defuse the current oil crisis, and address the other contentious issues on the agenda that require immediate resolution."
The remarks were made after the South Sudanese government announced plan in Juba on Friday to shut down oil production in response to a deepening row with neighboring Khartoum over pipeline fees.
South Sudan government spokesman Barnaba Marial Benjamin said there would be a complete shutdown within two weeks.
"We have taken this decision because South Sudan is not benefiting from oil," Benjamin said. "It is being taken by force by the Republic of Sudan, and the oil that is going through the pipeline is being looted.
"If Khartoum is continuing to do that, there is no other option for the South," Benjamin added.
Secession spat
Sudan wants duties of $36 (28 euros) per barrel of oil that passes through its territory, which equates to about one-third of the crude's export value.
The two countries were at loggerheads over oil even before the South seceded in July 2011. An agreement in 2005 ended a civil war that was waged over two decades and took around 2 million lives and set the stage for the South succession. When it separated in July, the South took control over two-thirds of the total oil output.
While land-locked South Sudan controls most of the oil, it needs to transport it through Sudan for export, which has access to the Red Sea.
As an agreement over fees has yet to be reached, Sudan said it took South Sudanese oil meant for export as a form of compensation until one was reached. The South considers this to be theft.
Benjamin claimed Sudan had seized oil worth $350 million in Port Sudan and prevented the sale of oil for over $400 million by restricting ships from entering or leaving the port.
South Sudanese Oil Minister Stephen Dhieu Dau said the government was planning the construction of an alternative pipeline to end its dependency on northern export facilities.
Sudan's Foreign Ministry in Khartoum responded by saying the South can "do what they want with their oil," but added that the South will suffer more than the north from a disruption of the oil flow.
Other options
South Sudan has considered its option to build a pipeline through Kenya, in order to access ports on the Indian Ocean. Oil industry insiders are, however, skeptical as it would have to cross through rough and violent terrain.
Oil companies in South Sudan include government owned Nile Petroleum Corporation, and Petrodar Operating Company, which is owned mainly by China National Petroleum Corporation (CNPC), Petronas of Malaysia, Sudapet of Sudan and SINOPEC of China.
China, which relies on South Sudan for oil imports is supporting negotiations between the two sides in the Ethiopian capital.
Author: Sarah Berning (AFP, AP)
Editor: Sean Sinico