Bloomberg News

South Sudan Says It May Halt Oil Output on Bashir Statement (1)

June 09, 2013

South Sudan’s government said it may stop oil production if comments by Sudanese President Umar al-Bashir ordering a halt to shipments are confirmed.

Bashir yesterday instructed Sudan’s Oil Minister Awad al-Jaz to cease oil flows from South Sudan because his government has evidence that the south is arming the rebel Sudan People’s Liberation Movement-North, or SPLM-N. Bashir’s comments, at the opening of an electricity plant on the outskirts of the capital, Khartoum, were broadcast on state television.

“This is just an unfortunate statement,” South Sudan’s Foreign Ministry spokesman Mawien Makol said in a phone interview yesterday from the capital, Juba. “This means we have to stop production.”

Landlocked South Sudan took over three-quarters of the formerly united Sudan’s output of 490,000 barrels a day when it seceded in July 2011 after a two-decade civil war. South Sudan halted production in January 2012 after accusing Sudan’s government of stealing $815 million of its crude. Sudan said it took the oil to recover unpaid transportation costs and processing fees. That and disputes over border security brought the countries to the brink of war in April 2012.

Production Resumed

South Sudan on March 12 agreed to restart pumping crude after the two nations resolved the dispute over transit fees. Oil in South Sudan is pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd., known also as Petronas, and India’s Oil & Natural Gas (ONGC) Corp. Before the shutdown, The country depended on crude exports for 98 percent of government revenue.

Bashir’s order comes after he threatened on May 27 to close oil pipelines from South Sudan “forever” if South Sudan gives support to rebels in the western Sudanese region of Darfur and the Blue Nile and Southern Kordofan states.

“Sudan won’t allow revenue from oil exports from South Sudan to be used for buying arms for rebels and mercenaries,” he said yesterday.

Clashes began more than 18 months ago in Southern Kordofan and Blue Nile between Sudanese government forces and the SPLM-N rebels who fought alongside the forces of South Sudan during the civil war. The fighting has displaced more than 1 million people, according to the United Nations.

The SPLM-N has also formed an alliance with three insurgent groups in Darfur to create a “viable democratic alternative” to Bashir’s government, the Small Arms Survey, a research group at the Graduate Institute of International and Development Studies in Geneva, said in an April 2012 report.

South Sudan has sought to reduce its reliance on Sudan for oil shipments by announcing plans to build a pipeline either via neighboring Ethiopia to an export terminal in Djibouti, or to a port being built at Lamu on Kenya’s coast.

The country can export their oil via Kenya or Djibouti “or wherever they want to take it,” Bashir said.

To contact the reporters on this story: Paul Richardson in Nairobi at pmrichardson@bloomberg.net; Michael Gunn in Nairobi at mgunn14@bloomberg.net

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


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