Six months after South Sudan turned off oil flow through neighboring Sudan the chairperson of the Steering Committee tasked to conduct studies on the Memorandum of Understanding told The Citizen yesterday after a short meeting that constructing two pipelines to Ethiopia and Djibouti was viable on economic aspects.
The landlocked South Sudan failed to agree with Sudan on how much fees it should pay for exporting its oil through the north's infrastructures. Sudan demands 34 $ per dollar while South Sudan offers to pay less than a dollar in accordance with the international practice.
The two countries have been negotiating over several contentious issues besides oil including borders, Abyei, external debts, citizenship and were unable to achieve a breakthrough in any of them.
South Sudan's government, which relies on oil earnings for 98 percent of its revenue, has cut its annual budget by a quarter in austerity measure as a result of the crude shutdown.
The country turned off its 350,000 barrels a day in oil production in January 2012 after accusing Sudan of stealing $850 million worth of its oil which Sudan said it confiscated for unpaid fees for shipping it through a pipeline to Port Sudan.
On April in the wake of the worst fighting between the two countries, Sudanese president Omer Hassan al-Bashir vowed that his country will not allow its southern neighbor to export any of its oil through the pipelines since they broke up.
The head of the Committee and the Deputy Minister for Petroleum and Mining, Elizabeth James Bol said the committee is working hard to speed up the process to start construction of the pipeline after conducting studies of MOU.
She added that the next step for the committee was to move to Djibouti to bind the understanding by next month.
James further said it will be in the Intergovernmental Agreement (IGA) where transit fees according to the international standard would be discussed.
Steering committee composed of five deputy ministers and five other technical staff from the Ministry of Petroleum discussed on ways to finalize the Intergovernmental Agreement (IGA) due to be signed after position of South Sudan is known.
On February 2nd this year, the three sisterly countries of South Sudan, Ethiopia and Djibouti signed Memorandum of Understanding to develop alternative crude oil pipeline and fibre optic connection for monitoring among others.