Bloomberg News

Sudan Blocks South Sudanese Oil Exports Via Its Pipelines

November 29, 2011

(Updates with comment by South Sudanese minister in third paragraph.)

Nov. 28 (Bloomberg) -- Sudan blocked oil exports from South Sudan via its pipelines and will only allow them to resume once a bilateral agreement has been reached on payment for the shipments, Sudanese Oil Minister Ali Ahmed Osman said.

Exports were stopped on Nov. 17, Osman told reporters today in Khartoum, the capital. Last month, Sudan threatened to block shipments unless an accord on transit fees and revenue sharing was agreed. South Sudan owes its northern neighbour $727 million for the August to November period, according to Osman.

“We consider it as a sign of irresponsible anger which does not show any sense of leadership in the government of Sudan,” South Sudan Deputy Petroleum Minister Elizabeth Bol told reporters today in Juba, the South Sudanese capital.

Landlocked South Sudan is trying to end its reliance on the north by talking to companies about building an export pipeline through Kenya, according to the U.S. Energy Information Administration. While South Sudan took control of about three- quarters of the former state’s output of 490,000 barrels a day when it seceded in July, it relies on the north for access to refining and an export terminal on the Red Sea.

Bol said the blockade prevented a shipment of 600,000 barrels of Nile-blend crude from being delivered to China International United Petroleum & Chemical Corp. A shipment of 1 million barrels of Dar blend oil to Geneva-based Vitol SA may also be at risk if the blockade continues, Bol said.

Row Over Shares

The halt to exports comes after South Sudan announced in a presidential decree on Nov. 8 that it seized the shares held by Sudapet, Sudan’s state-owned petroleum company, in joint operations with companies including China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd and India’s Oil & Natural Gas Corp. Sudan may sue over the seizure, Osman said.

“Seizing the company’s shares is completely illegal and Sudan has the right to sue the government in international courts,” he said. South Sudan on Nov. 21 defended its decision to take control of the shares, calling it a “legitimate act of sovereignty.”

African Union-sponsored negotiations between the two countries began on Nov. 21 over issues including the oil fees the south should pay to ship crude through the north and the disputed region of Abyei.

Southern Sudan’s government is studying the feasibility of building a new pipeline to export oil via its East African neighbours, rather than using Sudan’s oil pipeline that runs to Port Sudan on the Red Sea, the government said last week.

Southern officials have said previously they are considering building a pipeline that would carry crude to the Kenyan port of Lamu.

--Editors: Paul Richardson, Alastair Reed, Antony Sguazzin.

To contact the reporter on this story: Salma El Wardany in Khartoum at selwardany@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus