Home | News    Sunday 29 January 2012

South Sudan completes 90% closure of oil production

By Ngor Arol Garang

January 28, 2012 (JUBA) - South Sudan on Saturday said it had shut down 90% of its oil production, a day after the latest talks to resolve a fee dispute with north Sudan failed in the Ethiopian capital Addis Ababa.

Sudan wants landlocked South Sudan to pay $1billion in unpaid fees for using its pipelines and refineries to export its crude. Juba says it has paid fees since July, when it became independent and the previous arrangement expired.

On Friday Unity State, South Sudan’s largest producer said it completely stopped pumping oil.

“The shutting down processes of the oil operations have been progressing on well. 90% of the processes have been completed”, Stephen Dhieu Dau, the country’s oil minister told Sudan Tribune on Saturday.

He said technicians have now started “cleaning and the flushing of the facilities."

Sudanese president, Omar al-Bashir, and his South Sudanese counterpart, Salva Kiir, have been holding talks which saw participation of the president Djibouti, Ethiopia, Kenya and Somalia. The leaders, however, have failed to strike a deal.

Dau said talks have failed because Sudanese government refused proposal by the African Union to return the oil, which Khartoum has confiscated for payments it says it is owed.

“Nothing is coming out of these talks in Addis Ababa. The Sudanese delegations at the talks are showing no signs of commitment. Nothing shows that they want to end this crisis. They have refused all the proposals and advice by the African Union to resolve this crisis these talks begun”, the minister said.

He said: “I am told president Omer Al Bashir has this afternoon accepted to release ships with oil detained in Port Sudan but I still do not know whether they will implement it”.

On Saturday Reuters reported that Sudan said it would release the tankers carrying South Sudanese oil in a bid to defuse the detention between the two countries.

The minister explained that the AU proposal demands Sudan to pay for damages caused to the oil companies as a result of their actions and sign a letter of principles spelling out clearly that Sudan will not in the future divert or confiscate any oil belonging to the Republic of South Sudan being transported through its territories.

Dau claimed that Khartoum had sold part of the oil which was detained in Port Sudan to a company from United Arab Emirates and another from Singapore. Juba has threatened to sue any company that buys its confiscated oil.

"So how do you enter in to another agreement with someone who is not looking for a solution?”, he asked.

The senior official said the government would continue its plan to build a new pipeline through East Africa to avoid its reliance on North Sudan.

“We are still negotiating details of the alternative pipelines with the Kenyan and the Ethiopian governments. We have already a memorandum of understanding with the Kenyan government and we are discussing with Ethiopian authorities”, he said.

However, he said South Sudan was willing to continue discussions with the north over the other remaining issues in the Comprehensive Peace Agreement including the issue of Abyei, border demarcation, trade, debt and assets.

Majak D’ Agoot, the country’s deputy minister of defense on Friday described the closure of the oil production as “economic liberation” from the north. South Sudan fought decades of civil war between the 2005 CPA.

The senior member of the country’s ruling Sudan People’s Liberation Movement (SPLM) added he would prefer that the oil remains underground for the next generation instead of producing it to be confiscated by Khartoum.

Both countries rely heavily on oil revenues. Khartoum has exports around 125,000 barrels a day, since South Sudan seceded six months ago taking with it around 375,000 barrels a day in June. This had decreased to 350,000 bpd by the time production was stopped over the last week.

Oil revenue provides around 98 percent of South Sudan’s income, as it struggles to develop after decades of conflict. But the oil stoppage will also affect the north, which has suffered economically since South Sudan’s independence.