Kenya is quietly plotting a new regional diplomatic initiative to mediate the oil dispute between Sudan and the Government of Southern Sudan through the Intergovernmental Authority for Development (Igad).

Well-placed sources told The EastAfrican that President Salva Kiir appealed to Kenya to intervene when he visited Nairobi recently to take part in the ground breaking ceremony at the site of the proposed Lamu port.

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It is understood that when Prime Minister Raila Odinga visited President Yoweri Museveni in Kampala recently, it was to seek the latter’s support for the new initiative under the auspices of Igad, currently under the chairmanship of President Mwai Kibaki.

Mr Odinga was in Kampala in his capacity as an envoy sent by President Kibaki. Nairobi and Kampala’s role in playing big brother to South Sudan and Kenya’s decision to forge closer ties with Ethiopia and Somalia illustrates how the northern front is starting to reshape the contours of power in the East African Community.

Sources told The EastAfrican  that Kenya’s Vice President Kalonzo Musyoka will shortly travel to Khartoum and Foreign Minister Moses Wetangula to Addis Ababa, Djibouti and Eritrea on similar missions. It is the latest indication that South Sudan is beginning to lose faith in the negotiations being conducted at the level of  African Union, United Nations, US and the UK.

Analysts give three reasons for Juba’s discomfort with the diplomatic initiatives that have taken place so far. First, is the fear in Juba that the initiatives at the continental level are likely to end up exerting international pressure on South Sudan to accept an unfair oil deal.
Juba is especially uncomfortable with the push by the international community to load the agenda with humanitarian issues, which have been outstanding for a long time, arguing that this merely serves to mask the gravity of exploitation and extortion of South Sudanese oil by Khartoum.

Success or failure

Whether Igad will succeed where other diplomatic initiatives have failed remains to be seen. Analysts believe Igad has the levers to exert more pressure on Sudan since Khartoum will not want  face isolation by its regional neighbours.

It’s noteworthy that both Kenya and Djibouti have already signed a number of memorandum of understanding to build pipelines connecting to their ports. The fact that both President Kiir and Ethiopia’s Prime Minister Meles Zenewi attended the ground breaking ceremony of the proposed Lamu Port which will be the bridgehead to a new transport corridor connecting Kenya, South Sudan and Ethiopia with road railway and pipeline links, demonstrates the potential threat of isolation which Khartoum could  face if it insists on playing the lone ranger card in a region which is becoming more and more integrated.

Uganda, which will shortly be building its own oil pipeline and refinery, is also angling the opportunity of refining some of  South Sudanese oil. The  tensions over oil between Khartoum and Juba have been brewing ever since South Sudan became an independent state.

(Read: Uganda not worried by proposed South Sudan-Lamu pipeline)

But matters exploded recently after Juba shut down all oil production in the South in response to a decision by Khartoum to impose a $36 per barrel transportation fee on oil from the South. In December last year, the Minister of Finance of the Republic of Sudan announced that as from December 25, 2011, all shipments from the South  would only be allowed to leave Port Sudan  after paying fees amounting to $36 per barrel.

A few days later, Khartoum blocked four ships carrying 3.5 million barrels of oil from sailing out of Port Sudan. It followed a decision by Khartoum  to prevent four other ships from docking at Port Sudan. The ships which had purchased 2.8 million barrels of crude oil were unable to collect their purchases for several days.

In total, it is estimated that the revenue Khartoum had retained by the time the controversy broke was approximately $815 million. Juba also complained that Sudan had constructed  a tie-in pipeline  that was designed to permanently divert 120,000 barrels per day of South Sudan oil to refineries in the north. Southern Sudan is unhappy that despite the fact that the North is clearly at fault on the oil issue, international diplomacy is proceeding as if both side are equally culpable.