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South Sudan strikes new deal with Sudan on oil transit charges

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February 3, 2016 (JUBA) - South Sudanese government on Wednesday announced that it has reached an understanding with the government of neighbouring Sudan from which it seceded in 2011 to reduce charges for transporting crude oil to the international markets through Sudanese territory.

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South Sudan’s Petroleum and Mining Minister Stephen Dhieu Dau (3rd R) applauds as he restarts oil production in the main oil field in Palouge, on May 5, 2013. (Reuters)

South Sudanese minister of petroleum and mining, Stephen Dhieu Dau, told reporters after concluding a closed door meeting with his Sudanese counterpart had reached an agreement to review the charges considering the sharp fall in oil prices.

“Our meeting has finished. We have discussed and agreed in principle to review the agreement, especially the section related to the oil and now we have resolved to negotiate. And when we negotiate on the transitional financial arrangement in particular, it will not be a fixed $15 per barrel as it was agreed in 2012. It will be fluctuating up and down depending on the prices of the crude globally,” minister Dau told reporters on Wednesday.

He said the two parties through their technical teams would work out how much the new charges would be.

The young nation is obliged under the terms of the 2012 deal to pay Sudan $9.10 per barrel for oil flowing using Petrodar facilities in Upper Nile in addition to a fee of $15 per barrel in fulfillment of a $3.028 billion package which the two sides agreed as transitional financial arrangement (TFA). The TFA is meant to help Sudan cover the gap resulting from the loss of revenues due to secession of South Sudan from Sudan in 2011.

But now the two oil ministers representing South Sudan and Sudan hinted a fixed $15 per barrel rate would be renegotiated and the amount of $3 billion will not be affected by the new arrangement.

It will continue to be paid over a longer period of time. The transitional financial arrangement (TFA) payment, according to South Sudanese oil minister, “will be extended to more years.”

Dau’s remarks were quickly confirmed by the Sudanese minister of petroleum, Mohamed Zayed Awad, saying they “have agreed in principle” to reduce the monthly payments for transitional financial arrangement and extend period for payment.

He declined to reveal the rate at which his country would be paid as part of the new understanding between the two countries, saying it will be determined by team which the two sides would form to come up with reasonable rate based on market reactions.

“For this issue to be scientific, we gave it to the technical people... Yes, we have agreed in principle but we need the technical people to work on it and in a week to come we will reach to the conclusion,” minister Zayed said.

“We don’t want to talk on figures because we are not ready as it requires a lot of technical work and may be after when they conclude – we will tell you,” he added.

The war torn young nation has been hit by economic crisis as prices of its only export commodity, the oil, has dropped from $110 per a barrel before the civil war in 2013 to just $24 per barrel.

After paying Sudanese their charges for transporting the oil through their facilities as well as paying oil companies, the government of South Sudan remains only with less than $5 dollars a barrel.

(ST)

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  • 3 February 2016 20:42, by Ayuiu Makuac Lam

    I thanks Sudan, for reducing the charges from $25 to $15 per a barrel.

    repondre message

    • 3 February 2016 20:54, by Force 1

      The deal is just a daylight robbery against South Sudan! The only way South Sudan is going to avoid this ripped off; South Sudan need to reroute the oil transit route to somewhere else that’s not through Sudan!

      repondre message

      • 4 February 2016 06:56, by Bazinguaboy

        Re-route the pipeline indeed! We haven’t built a single interstate road, let alone hospital or school with all the money we have chopped. What we have is what we had before independence. Unless we make a mental check, just keep paying Sudan the oil transit fee and stop whining about getting robbed in broad daylight. And that is a popular demand ;)

        repondre message

  • 3 February 2016 21:16, by Ayuiu Makuac Lam

    Force1
    This is not a first times for South Sudanese to be looted by Sudan.

    repondre message

    • 3 February 2016 23:02, by Lotodo Awino Odug

      this is better than nothing.

      repondre message

    • 3 February 2016 23:41, by Force 1

      Ayuiu Makuac Lam;

      I didn’t say this is the first time for South Sudan to be looted; in-fact I was behind the first oil shutdown when South Sudan shut it down against Sudan; if you were aware it! You would be the last guy to tell me the history of oil transit fees between Sudan and South Sudan!

      repondre message

  • 3 February 2016 23:06, by lino

    We shouldn’t be happy about! We will be paying Sudan till our oil is depleted or we find other routes or build refineries!!!

    repondre message

    • 3 February 2016 23:22, by Lotodo Awino Odug

      We will have little to reap from the sell of oil, although I believe this million will go to Dhieu Dau, Machar Achiek and Deng Athoolbai.

      repondre message

  • 4 February 2016 06:22, by Eastern

    .....it’s again below the belt for South Sudan; poor deal. Shame to kleptocrats!

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