North, South Sudan Agree Terms of Oil Transfer Deal

South Sudan accepts a fee for oil exports through the north but hopes China will pay.

President Salva Kiir Mayardit of South Sudan, January 8, 2011
President Salva Kiir Mayardit of South Sudan, January 8, 2011 (Al Jazeera English)

The Sudanese government agreed to transfer Southern Sudanese oil again at a fee of nearly $9.5 per barrel, the Financial Times reports. The South is heavily dependent on petroleum exports which were blocked in recent months by the government in Khartoum over a price dispute.

Landlocked South Sudan has two-thirds of the former unified Sudan’s oil output but needs access to northern pipelines and port facilities to sell overseas.

Despite a 2005 peace deal, possession of oil reserves which are situated near the border remains a source of contention. Khartoum confiscated South Sudanese oil exports in January of this year to make up for what it said where unpaid transit fees. As recently as last April, hostilities broke out with north Sudanese air forces reportedly bombing oilfields and the South attacking a border town.

The Southern government in Juba will pay more than $3 billion in addition to fees to get the oil flowing again. $3 billion more will have to be paid by outsiders to satisfy the government in Khartoum. The United States won’t make up for the shortfall because of economic sanctions that have been imposed on Sudan. China, a major Sudanese oil importer, may have to step in its place but has been reluctant to intervene in the conflict.

China has pledged $8 billion in loans to South Sudan to enable the country to build a pipeline through east Africa so it could rely less on the export infrastructure in the north but the country says it has received only a fraction of the money yet.

South Sudan’s minister in charge of reconciliation urged China in May to play “a more active role” to help resolve disputes over borders and oil exports. “By trying to move away from Khartoum so as to get closer to South Sudan and trying not to get too close to South Sudan so as not to cause displeasure to Khartoum — neither Khartoum nor Juba will be happy with China,” said Pagan Amum Okech.

China doesn’t want to pick sides, fearing a backlash against what is sometimes already perceived as economic exploitation or neocolonialism in the African states where Chinese companies do business.

Moreover, Beijing insists on a foreign policy of noninterference as it has to maintain amicable ties with both governments if it is to continue to buy Sudanese oil.

South Sudan pumps around 350,000 barrels of petroleum per day, according to government data. The north needs the entirety of its oil production, some 115,000 barrels per day, to meet domestic demand. Before the South declared independence last year, Sudan sold more than 60 percent of its oil to China.

Comments

  • You are feeding people with wrong information and analysis. It is tragic to have this pattern of believes and analysis which clearly does not have any objective but subjective blogging without the indepth understanding of the entire story.
    Take my word. South Sudan has been in this place before and will never be in the same spot for ever. The analysis gives an impetus to its idealogy and re-alignment policy.

  • Leave a reply