9 February 2013

South Sudan's Pipeline Construction Begins October - Minister

Juba — Construction of South Sudan oil pipeline, to by-pass reliance on neighbouring Sudan will commence by October, the country's Petroleum and Mining minister, Stephen Dhieu Dau told Sudan Tribune in an exclusive interview on Saturday.

The government says it is in series of direct discussions with a number of donor countries to help provide funds for construction of an alternative pipeline to resume production and transportation of its crude oil to international markets,

In January 2012, 18 months after seceding from Sudan, the young nation stopped its oil production as part of a transit fee dispute with Khartoum. The move has severely effected South Sudan's economy as oil revenues accounted for 98% of the government's income.

Dau said he has met "potential investors" in the oil sector who have expressed readiness to finance construction of the pipeline during his recent visit to South Africa, where he participated in a mining conference.

No deals have been signed but the government is in "talks with companies and governments who have expressed readiness to finance the construction of the alternative pipeline", Dau told Sudan Tribune.

South Sudan is still considering three potential routes to reach the East African coast. Until the shutdown Southern crude was exported through Port Sudan on the Red Sea.

Despite agreeing on new transit fees over four months ago, border tensions have meant that production has not resumed. Sudan insists that border security be resolved as precondition to other aspects of the September deal being implemented.

Juba has accused Khartoum of adding additional demands and so the impasse continues.

The official said previous Memorandums of Understanding (MoU), which his ministry has signed with Ethiopia and Djibouti authorities to create a mechanism for the construction of a pipeline through their countries still stood.

However, Dau also expects his country to sign similar deals with the government of neigbouring Uganda and Kenya, which would allow the construction of a pipeline to the Kenyan ports of Lamu and Mombasa.

The construction of one of the new pipelines would begin towards in October or earlier "if all goes according to the plans", Dau said in an exclusive interview with Sudan Tribune on Saturday.

A number of companies, including a Japanese company which has just completed feasibility studies on the Lamu route, has shown interest to partner with a number of American companies to jointly fund the project.

"We have already reached an understanding with some international companies to do more exploration and to build pipeline with understanding that they will own it, operate it and transfer later. We shall only be renting it from them during the period of the agreement", he said.

The senior member of the country's governing Sudan People's Liberation Movement (SPLM) said his ministry had already given a contract to a Germany company, ILF, to carry out a feasibility study on the South Sudan-Ethiopia-Djibouti route.

The study, he added, has begun but will take about six to nine months before it is completed.

South Sudan took with it nearly 75% of the oil resources it previously shared with Sudan, when it seceded in July 2011 after a self-determination referendum conducted in January that year. The vote was a key part of the 2005 peace deal, which ended over two decades of the north-south Sudan civil war.

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