Bloomberg News

Sudan Says It Hasn’t Stopped South Sudan’s Oil Exports

November 30, 2011

(Updates with comments by Sudanese negotiator starting in second paragraph.)

Nov. 30 (Bloomberg) -- Sudan’s government said it hasn’t blocked South Sudan’s crude exports, as the oil minister said two days ago, and has started taking a percentage of the south’s oil that it believes should be paid as transportation fees.

“We haven’t stopped exports and we won’t, but over the last two days we just took over part of their exports since they don’t pay fees,” Sudan’s minister of state for the presidency, Idris Mohammed Abdel Kader, told reporters today in Khartoum as he returned from talks with southern officials in the Ethiopian capital. He said he couldn’t specify how much the charges were.

Sudanese Oil Minister Ali Ahmed Osman on Nov. 28 announced a blockade on South Sudan’s oil exports that pass through its pipelines and said it would be lifted only when the two countries agreed on payments for the shipments. They failed to reach a deal in African Union-backed talks this week, Sabir al- Hassan, a spokesman for Sudan’s delegation, told reporters earlier in Addis Ababa. Negotiations will resume next month, he said.

While South Sudan took control of about three-quarters of the former unified Sudan’s output of 490,000 barrels a day when it seceded on July 9, it relies on the north for access to an export terminal on the Red Sea.

“Sudan’s economic situation has worsened in the last months because the South refuses to pay us the fees,” Abdel Kader said. “The currency declined by 30 percent and inflation increased.”

Sudan Rejects Offer

Sudan rejected an offer by South Sudan of $5.4 billion compensation package for the loss of its oil fields, the south’s chief negotiator, Pagan Amum, told reporters in Addis Ababa. Sudanese authorities responded to the offer with “hostility and threats,” he said.

“South Sudan insist they have the right to continue exporting oil through our facilities without paying charges,” al-Hassan said. “If we do not find an agreement on fees and charges, we are under obligation to take our dues.”

He also criticized South Sudan’s seizure on Nov. 8 of stakes held by Sudan’s state oil company, Sudapet, in joint operations in the south with companies such as China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp.

Assets Confiscated

“Their assets that were more than $2 billion dollars were confiscated by a presidential decree issued by the president of the Republic of South Sudan,” al-Hassan said.

Amum said that Sudan has kept revenue owed to the south for oil exports from May to July. Since a 2005 peace agreement that ended a two-decade civil war until South Sudan’s independence, the north and south split earnings from crude pumped in southern fields.

“The claim that they need us to pay them processing and transportation fees is not true because we are paying those to the companies,” Amum said. “We are paying the Chinese. What the north is talking about is extortion.”

China yesterday urged the two sides to reach agreement in negotiations.

“Maintaining normal production of oil is important to both South Sudan and Sudan,” Chinese Foreign Ministry spokesman Hong Lei told reporters in Beijing. “We hope North and South Sudan can stay rational, show restraint, and resolve relevant problems through neighborly pragmatism and friendly talks.”

--With assistance from Jared Ferrie in Juba, South Sudan,. Editors: Karl Maier, Paul Richardson

To contact the reporters on this story: William Davison in Addis Ababa at wdavison3@bloomberg.net; Salma El Wardany in Khartoum at selwardany@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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