By Toby Collins

October 07, 2011 (LONDON) – Despite conflict over pipeline fees and speculation about alternative routes, South Sudan has exported 22 million barrels of oil via North Sudan since independence last July.

South Sudanese soldier at an oil processing facility, Unity state, South Sudan, November 10, 2010 (Getty)

The South Sudanese ministry of petroleum and mining released a statement on Wednesday revealing that during the July-October period South Sudan has exported oil worth an estimated US$2.14 billion via Port Sudan.

Since South Sudan became an independent country on 9 July 2011, there has been dispute between the neighbours about the tax that should pay to Khartoum over oil transportation.

Since secession, the South Sudan has been producing over 350,000 barrels a day, while North Sudan controls the refineries and the pipeline with a production of 130,000 barrels per day.

The US nominee for ambassador to South Sudan Susan Page, on Wednesday said that with an estimated potential US$4-5 billion annual oil wealth income, the state has “a unique opportunity to get it right, by managing its resources efficiently, creating fiscal transparency, ending corruption, avoiding the pitfalls that beset so many resource-rich nations."

The minister Stephen Dhieu Dau stressed in the statement that oil management will be conducted "in a transparent and accountable manner and will take measures to safeguard petroleum revenue streams".

He further reassured the foreign companies working in the South Sudan, saying that the terms and regarding the conditions of the existing contracts, "the proportion of economic benefits due to each party will not change."

As a nascent state, with some of world’s lowest economic indicators this capital is critical.

Also, North Sudan is an economic rut. In September the IMF projected a negative real GDP growth for Sudan; -0.2% in 2011 and -0.4% in 2012. This is down from the 6.5% growth achieved in 2010 and an average of 6.7% in the years 2003-2009.

This has serious ramifications as people are protesting on the streets of Khartoum because of the increased costs of basic commodities.

As a landlocked country South Sudan’s oil must cross an international border for export to its major markets in Asia. Possible routes to the coast are through North Sudan and through Kenya.

Although there have been discussions about the construction of a pipeline to Lamu in Kenya, it is currently proving prohibitively expensive, especially as the pipeline to Port Sudan is fully operational.

There is dispute between the neighbours regarding the fees South Sudan should pay to export its oil through North Sudan. In August it was reported that North Sudan was seeking fees of US$32 per barrel and South Sudan US$0.41.

In 2010 it was estimated that Sudan as a whole was sub-Saharan Africa’s third biggest oil producer.

Also, the European Coalition on Oil in Sudan estimate that the current oil production of South Sudan will decrease to 200,000 by 2016 and two years later in 2018 it will decline to 160,000.

There is concern over South Sudan’s reliance on oil revenues, which make up 95% of its income. It is estimated by the World Bank that oil production in South Sudan will peak in 2012 and be in sharp decline by 2015.

(ST)