Bloomberg News

Petrodar Names New Acting Head After South Sudan Expulsion

February 24, 2012

(Updates with analyst comment in third paragraph.)

Feb. 24 (Bloomberg) -- Petrodar Operating Co., operator of an oil pipeline that runs from South Sudan through Sudan to the Red Sea, named Baidzawi Chemat as its acting president after the southern government expelled his predecessor, Liu Yingcai.

South Sudan’s petroleum minister, Stephen Dhieu Dau, ordered the Liu’s expulsion on Feb. 20, saying he sided with Sudan in a dispute over oil and gave “limited cooperation” in implementing a southern decision to shut down crude output. Petrodar’s biggest shareholders are China’s state-owned China National Petroleum Co. and Kuala Lumpur-based Petroliam Nasional Bhd.

“There remains significant room for a deterioration of the position of operating companies given South Sudan’s recent decision to shut down oil production,” said Jean-Baptiste Gallopin, a London-based analyst with Control Risks. “The authorities have long viewed Asian national oil companies as allies of Khartoum.”

South Sudan, which gained control of about 75 percent of the formerly united Sudan’s 490,000 barrels a day of output at independence in July, shut down production last month. It took the action because Sudan loaded 2.6 million barrels of southern crude onto four ships and diverted about 120,000 barrels to its refinery through a “tie-in” pipeline it connected to Petrodar’s pipeline.

President Umar al-Bashir’s government in Khartoum, the Sudanese capital, said it confiscated the oil to make up for unpaid fees.

Negotiations Fail

Since South Sudan’s secession, talks have failed to reach agreement on how much the landlocked south should pay for the use of a pipeline running across Sudan. Negotiators from the two countries are scheduled to meet again March 6 in the Ethiopian capital, Addis Ababa.

The written order from Dau also accused Petrodar of “cooperation with Sudan in illegal loading” of South Sudan’s crude at the Port Sudan export terminal.

Petrodar, in a Feb. 19 statement, said it “issued a written order to its staff not to comply with the forced lifting” that was supervised by Sudanese security forces.

The company said it also wrote to the Sudan government stating its “disagreement” with the government’s construction of the tie-in pipeline, and said the crude was diverted “without any involvement of Petrodar staff.”

Dau said Petrodar refused to fully relocate its headquarters to the South Sudanese capital, Juba, from Khartoum.

The company has also failed to comply with a decree by South Sudanese President Salva Kiir that the company transfer the stake in Petrodar held by Sudapet Co., Sudan’s state oil company, to South Sudan’s Nile Petroleum Corp, he said.

--Editors: Karl Maier, Ben Holland

To contact the reporter on this story: Jared Ferrie at jferrie1@bloomberg.net

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


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