South Sudan says Sudan blocking its oil exports

Reuters News
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Posted: Jan 11, 2012 12:23 PM
South Sudan says Sudan blocking its oil exports

By Hereward Holland

JUBA (Reuters) - South Sudan has accused the Sudanese government of blocking 3.4 million barrels of its crude oil exports, diverting over half a million barrels to its refineries and building a pipeline to keep diverting its oil.

Six months after landlocked South Sudan seceded from Sudan, the two countries have failed to agree on how much Juba should pay Khartoum in fees to transport its production of 350,000 barrels per day to port.

South Sudan's minister of petroleum and mining, Stephen Dhieu Dau, said Sudan was re-routing all of the new nation's Nile Blend crude oil entitlements for December to refineries in El Obeid and Khartoum.

"Any diversion of (South Sudan's) oil without its consent is nothing less than theft, and preventing crude oil from leaving port is unlawful and a violation of international laws and norms," Dhieu Dau said in a statement obtained by Reuters on Wednesday.

The Sudanese foreign ministry could not be reached for comment. President Omar Hassan al-Bashir said this month Khartoum would impose a fee on Juba until a deal was reached on a transit fee but gave no details.

Already tense relations between the two nations soured in November when South Sudan accused Sudan of temporarily seizing 1.6 million barrels at Port Sudan. Sudan threatened to take 23 percent of South Sudan's oil exports as payment in kind until a final deal.

Dhieu Dau said Khartoum had sold over half a million barrels of South Sudanese oil to an undisclosed Sudanese buyer and had started construction of a pipeline that would permanently deliver 13 percent of the South's Dar blend to refineries in Khartoum.

Analysts say Khartoum needs to keep supplying oil to its refineries or risk damaging its facilities because of the nature of the crude.

Dhieu Dau charged Khartoum with preventing two ships carrying 1.6 million barrels of South Sudanese oil from leaving Port Sudan, another from loading 0.6 million barrels and two others from entering port to take possession of a further 1.2 million barrels.

Companies that buy crude from Sudan while the South's oil is being stolen "will enjoy no further business with the Government of South Sudan," he said.

"South Sudan further reminds Khartoum that the 1.6 million barrels of Dar Blend, now loaded onto ships, no longer belongs to South Sudan," Dhieu Dau said.

South Sudan voted overwhelmingly for independence in a referendum a year ago, the culmination of a 2005 peace deal that ended decades of civil war in which over 2 million people died.

Dana Wilkins from Global Witness, which investigates transparency in extractive industries, said the delays and penalties incurred by the shipping companies could become very expensive if the situation is not resolved swiftly.

"Shaking investor confidence in an already uncertain context is a big move for Khartoum to be making right now," Wilkins said.

(Reporting by Hereward Holland; Editing by Ulf Laessing and Jane Baird)