Sudan seized oil worth $815 million, S. Sudan says
Mon Jan 23, 2012 4:42pm GMT
(Adds details of China oil buying, paragraph 7)
By Hereward Holland
JUBA Jan 23 (Reuters) - South Sudan said on Monday it started shutting down
oil production and accused Sudan of seizing $815 million worth of crude,
escalating an increasingly bitter row over oil revenues between the former
civil war foes.
South Sudan seceded last July under a 2005 peace deal that ended decades of
civil war between north and south, but the two have remained locked in a
dispute over how to untangle their oil industries.
The new landlocked nation needs to use a northern pipeline and the port of
Port Sudan to export its crude but has failed to reach an agreement with
Khartoum over a transit fee, prompting Sudan to start seizing oil as
compensation.
South Sudan started shutting down oil output on Sunday and expected to
finish the process within two weeks, government spokesman Barnaba Marial
Benjamin told Reuters by phone.
"The task force has been formed for the shutdown and they are already in the
fields carrying out the instructions," he said, listing the Thar Jath field
in Unity state as one field where the shutdown had begun.
Officials said in November South Sudan was producing about 350,000 barrels
of oil per day.
China is the biggest buyer of oil from the two countries, some 12.99 million
barrels last year. That amounted to five percent of last year's crude
imports by China, which is also the top investor in South Sudan's oilfields.
South Sudan's President Salva Kiir accused Khartoum of having "looted"
revenues amounting to roughly $815 million and building a tie-in pipeline to
divert 120,000 barrels per day of southern production flowing through the
north.
"Given our history with the administration of (Sudan's) President Bashir, we
realise that, unfortunately, we must prepare for a disruption of revenue
that could last many months," Kiir told parliament in Juba.
The justice ministry in South Sudan's capital Juba published a list of three
vessels it said had been forced to load southern oil at Port Sudan on orders
from Khartoum.
The MT Sea Sky loaded 605,784 barrels on Jan. 13/14, the MT Al Nouf around
750,000 barrels on Jan. 16/17 and the MT Ratna Shradha another 600,000
barrels on Jan 19/20, the ministry said.
Officials in Khartoum could not immediately be reached for comment. Foreign
Minister Ali Ahmed Karti told Reuters last week that Khartoum was entitled
to seize oil to compensate for transit fees.
South Sudanese officials have said they are planning to build a new pipeline
to export oil through East Africa, but analysts have expressed scepticism
because of the difficulty of carrying out such a project.
"The financial, technical, and political obstacles to the construction of an
alternative pipeline are enormous," Jean-Baptiste Gallopin, an analyst at
Control Risks, said.
"I have no doubt both Sudanese governments are under a lot of international
pressure to reach an agreement, because the risks of conflict are real at
this stage," Gallopin said.
NO END TO ROW
The two countries are expected to resume oil talks soon, sponsored by the
African Union in Addis Ababa, after negotiations were suspended last week.
Sudan's President Omar Hassan al-Bashir said this month Khartoum would
impose a fee since Juba had not paid anything for using northern export
facilities since independence.
Khartoum is demanding $1 billion for fees since July and $36 a barrel as a
transit fee, officials have said.
South Sudan's Kiir said his government was planning to reduce its dependence
on oil revenues, which make up 98 percent of state income.
"We will need to find other sources of funding. In doing so I have
instructed the ministry of finance to initiate contingency plans for revenue
collection and allocation," he said.
Sudan's civil war devastated much of the south, leaving the new nation one
of the least developed in the world.
The row with Sudan has stirred anger among some in South Sudan, where
independence is often framed as the culmination of a long struggle against
political and economic marginalisation.
Underscoring those sentiments, around one thousand people marched to
parliament on Monday to support the government's decision to shut down oil
production.
The crowd, mostly university students, cheered, waved their fists in the air
and carried placards reading: "Looting our oil is a crime" and "We call on
the international community to help the infant country." (Reporting by
Hereward Holland and Alexander Dziadosz; Writing by Ulf Laessing and
Alexander Dziadosz, editing by Jane Baird and Jason Neely)
C Thomson Reuters 2012 All rights reserved
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Received on Mon Jan 23 2012 - 16:22:03 EST
