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Sudan: Country Returns to Sudan for Oil
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Addis Fortune (Addis Ababa)
14 January 2008
Posted to the web 14 January 2008
Issayas Mekuria
The Ethiopian government agreed with the Sudanese government last Thursday to resume oil imports from its northern neighbour.
Following the expiration of the agreement the two countries signed in 2002, Ethiopia was looking for an alternative supplier in the Middle East as it could not strike a deal with Sudan to extend the procurement.
"We have reached an agreement after finishing details left unsettled after the previous accord expired," Alemayehu Tegenu, minister of Mines and Energy of Ethiopia, told Fortune.
Alemayehu signed the agreement with his Sudanese counterpart, Awad Ahmed Al Jass (PhD) last week January 10, 2007 at the Sheraton Addis.
Sudan has been annually supplying 80pc of Ethiopia's annual consumption of benzene (120,000 metric tonnes) for the past five years on credit. However, the previous procurement agreement fell into uncertainty in May 2008 when the United States (US) Treasury Department imposed sanctions on the Sudanese state-owned oil supplying company, Sudan Petroleum Corporation (SPC), claiming the Sudanese government provides arms to the Janjawid Islamic Group from oil revenues.
The Commercial Bank of Ethiopia (CBE) could not therefore transfer 2.5 million dollars to SPC through Citibank for the oil it procured on credit.
Though the Ethiopian government then proposed a countertrade (in kind) to pay the Sudanese government in agricultural products, the two parties were unable to reach consensus on the value and volume of the grains.
Subsequently a senior delegation led by Girma Birru, minister of Trade and Industry, that includes Yigzaw Mekonnen, director general of Ethiopian Petroleum Enterprises (EPE), and Abie Sano, president of CBE left for Saudi Arabia to explore options. The delegation held discussions with senior officials of the Saudi government.
However, amidst expectations that the country would switch to Saudi Arabia for its oil needs, the Sudanese government accepted the countertrade proposal and payment in currencies other than dollars.
"There are some new requests that we accepted in the latest agreement," Alemayehu told Fortune.
The Minister said the agreement was limited to one year because Ethiopia's consumption increases annually.
"We have agreed to renew our agreements every year," he said.
The construction of an asphalt road, according to Alemayeu, would simplify the transportation of the commodity.
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The 156Km Gadarif-Doka-Gallabat-Metema road was officially inaugurated in December 2007 by Prime Minister Meles Zenawi and Sudanese President Omer Hassan al-Bashir.
The two countries also discussed electric power export to Sudan a year after the discussion failed due to tariff disagreements.
"We have also agreed to resume the discussion," Alemayehu told Fortune.
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