Khartoum, Juba agree on new pipeline fees

Saturday February 6 2016

By AFP

Sudan and South Sudan’s oil ministers have agreed in principle to a new oil pipeline deal, after slumps in global prices made Juba effectively pay to export crude.

The two countries, which split up in July 2011 after decades of war, had agreed to a fixed fee for the use of Sudan’s export pipelines.

But, with global prices so low, the fee was more than the price of the oil itself, meaning South Sudan lost money on every barrel it sold.

At a meeting in South Sudan’s capital Juba last week, the ministers agreed to tie the fee to oil prices, although exact details are yet to be settled.

“We have agreed in principle to review the agreement,” said Stephen Dhieu Dau, South Sudan’s Oil Minister.

“It will be fluctuating, depending on the prices of the crude globally,” he added.

His northern counterpart, Mohammed Awad, said the “technical people” would now work out the details.

South Sudan is estimated to produce around 150,000 barrels a day — down from 350,000 at Independence in 2011 — after many oil fields ceased operating during the recent conflict.

Observers said that Juba is already in arrears on transit fee payments to Khartoum in recent months. Financial mismanagement, a previous oil shutdown in 2012 amid a border conflict with Khartoum, and the conflict that started in December 2013, have drained the country’s reserves.

The currency is also at risk of collapse, inflation is rocketing and government revenues are virtually non-existent.

Ceasefire monitors have criticised government spending on arms, amid a dire humanitarian crisis with several areas on the brink of famine.

Thousands have died in the war, more than 2.3 million people have been driven from their homes and 3.9 million South Sudanese face severe food shortages.