South Sudan to renegotiate oil fees with Sudan: official

January 31, 2015 (JUBA) – South Sudan’s petroleum minister, Stephen Dhieu Dau said his country will consider whether to continue paying Sudan $25 per barrel of oil or push for reduction.

The move, Dau said, was as a result of global fall in oil prices which has badly affected South Sudan’s largely oil-dependent economy.

Juba pays Khartoum $25 per barrel for oil transported through the Sudanese territory.

Dhieu, however, said the $25 per barrel of oil being paid was meant to expedite the repayment of a $3 billion compensatory package they agreed to pay Sudan following South Sudan’s cessation in July 2011.

“We will consider the charges and we are studying how to address this,” said Dau.

He said the “tariffs cannot be negotiated,” but appealed to the African Union High Implementation Penal (AUHIP) for South Sudan and Sudan to consider his calls.

“The mediators who mediated the peace and the cooperation agreement between the two countries should have the same argument that South Sudan should not be allowed to collapse if we are losing more and it has become now in favour of Sudan,” said Dau.

South Sudan heavily relies on oil to fund up to 98% of its budget. Oil production in Unity state closed in December 2013 when rebels overran the production fields and reduced oil output by a quarter.

The situation has worsened as global oil prices continue to decline amid a declined in South Sudan’s local currency against the dollar.

It remains unclear when Juba will initiate discussions with Khartoum.

South Sudan received $3.376 billion in oil revenue in 2014, the petroleum minister announced early this year. The young nation, however, paid $884 million to Khartoum, $781 million for repayments of loan and retained $1.711 billion as a net amount.

“Indeed, despite the ongoing crisis, South Sudan emerged from 2014 not submerged in debts to foreign creditors but demonstrating fiscal restraint responsibility,” Dau earlier disclosed.

The minister further said the 2014 “challenges were compounded by the recent dramatic reduction in the world market price of crude oil.”

“It will come as no surprise that one effect of the decrease in the global oil prices is the fairly substantial reduction of the [oil] revenue our nation is receiving in its sales of crude oil,” he said.

The one-year-old conflict in South Sudan led to the closure of oilfields in Unity state as daily production dropped to 160,000 bpd.

(ST)