12 March 2013

South Sudan May Soon Resume Oil Exports Through Sudan

Photo: Joseph Kariuki/The Star
The Ngamia 1 oil rig in Turkana where Tullow Oil is prospecting for oil with initial signs of huge deposits.

Khartoum — The delegations of Sudan and South Sudan in the Ethiopian capital agreed on Tuesday to allow for the resumption of oil exports that were suspended last year for disagreement on the transit fees that should be assessed.

Landlocked South Sudan inherited most of the 350,000 barrel-per-day oil reserves that existed under the once united country but can only export it using the pipelines that run all the way to the terminals on the Red Sea.

Under the terms of the implementation matrix distributed by the African Union High Level Implementation Panel (AUHIP), the governments of the two countries are to instruct oil companies within 14 days to re-establish production, processing and transportation.

Last year the two countries signed a number of cooperation agreements that called for resolving border issues, establishing demilitarized zone, implementing four freedoms pactand resume oil production.

But Khartoum put implementation on hold and insisted that security portion is concluded before moving to effecting other items.

Last Friday, two sides signed a deal in the Ethiopian capital outlining on steps to implement the demilitarized zone (DMZ) removing a major obstacle in the way of other issues.

The loss of oil exports in the dispute over pipeline fees has left both economies in turmoil. Oil is the main source of state income for food imports.

It remains to be seen how long it will take oil companies to prepare the pipelines for the flow of oil, a process which could take several months.

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InFocus

Tripartite Agreement on South Sudan Oil

The Ngamia 1 oil rig in Turkana where Tullow Oil is prospecting for oil with initial signs of huge deposits.

Delegations of Sudan, South Sudan and Djibouti have agreed to allow for the resumption of oil exports that were suspended last year. Read more »