Home | News    Monday 15 August 2011

South Sudan reiterate rejection of high oil transit fees

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August 14, 2011 (KHARTOUM) – South Sudan is not prepared to accept the fees proposed by Khartoum in return for transporting the oil produced by the landlocked state, a Southern official said today.

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“The amount of money Khartoum wants us to pay is unreasonable,” David Loro Gubek, undersecretary at South Sudan ministry of energy and mining, told Reuters in an interview.

Although South Sudan became an independent state early last month many thorny post-secession issues such as border demarcation, Abyei, national debt and most importantly oil have yet to be resolved.

The bulk of oil produced in pre-secession Sudan was produced in the South and officials in Khartoum have been warning citizens in the North of hard days ahead as exports of oil were the main source of income and hard currency over the last six years since the signing of the Comprehensive Peace Agreement (CPA).

Sudan has been banking on recovering part of the lost revenue by charging fees to the South for using the pipelines running through the North all way to the coastal city of Port Sudan. It has been reported that Sudan asked for $32 per barrel for the service, something which South Sudan vehemently rejected.

This is worth roughly a third of South Sudan’s export value at current prices. according to Reuters calculations.

Last month, Sudan’s parliament approved an alternative 2011 budget that lawmakers said included an annual income of $2.6 billion for transit fees — the same amount expected for the loss of South Sudan’s oil production.

“If Khartoum insists that unless we pay they are not going to allow us to use these things, then the Republic of South Sudan... could request them to close the pipeline because it is discriminative” Gubek said.

The minister said the South may seek other alternatives including building a separate oil pipeline if the North insists on the $32.

“We are not the only country exporting oil through their neighbor’s land... Why should ours be terribly high” Gubek said. “If we are forced, we will put in a separate pipeline”.

This month Sudan blocked a 600,000 barrels crude cargo for at least 24 hours saying that Juba needs to pay custom duties before the oil shipment can be allowed to proceed. It was later released however on unknown terms.

Gubek said that they have received offers from several international companies offering to fund a new pipeline that runs through neighboring Kenya.

“Companies including Chinese, Japanese, South Koreans and other Middle East countries are prepared to fund the pipeline up to Lamu,” he said.

He noted that China, which buys a substantial part of its oil from Sudan, appeared keen on supporting the new state as much as they do to Khartoum.

“The Chinese also want to please us equally. It is the Chinese who built the pipeline and it is the Chinese who built the refinery in Khartoum,” Gubek said.

On Monday, Chinese foreign minister Yang Jiechi visited Khartoum in the first high-level visit of a Chinese official since South Sudan became independent. He later left for talks in the southern capital Juba.

The Saudi-based Al-Sharq Al-Awsat newspaper said this week that the Chinese official informed Khartoum during the visit that their proposed fees is "exaggerated".

The African Union (AU) panel led by former South African president Thabo Mbeki has been trying to bridge differences between the two sides on the oil fees but has been unsuccessful so far.

(ST)

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  • 15 August 2011 05:37, by Waucity

    yes, northeners are amazing people, they deliberately force people into tear and grieve and then demand too much from people..What for? People in Southern Kordofan still have to go through war because people called arabs exist in Sudan. 50% of the oil share is a joke,, because what would be the point of independence if so. I am now prepared to give business of opportunities to those who would respect human rights..LIKE kenya...If you know what’s good for you, you need to hand over the Southern Kordofan governorship to the NUBA PEOPLE AND LET THEM GOVERN THEMSELVES.

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    • 15 August 2011 06:15, by Jay

      Here is news flash for Khartoum, no one in the South is going to accept $ 5.00 a barrel transit fee, let alone your bogus $ 32.00 a barrel!

      Stop playing hardball with us, Just don’t pump the oil all the way to port sudan this time. We’ll have the customers here in the South Sudan that will buy at a fair price.

      We can sell it to any Western company at a half price of stock market, we better let other enjoy hugh profit than those clowns in Khartoum.

      We know the price of crude oil in the stock market, sometimes it’s below or over hundred dollars a barrel.

      South Sudan Lower and upper House will be willing to approved to any Western customer at a fair price. The other half price will be for transportation and their profit.

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      • 15 August 2011 06:44, by Ahmed Chol

        The first question to ask is, how much is a barrel in the market? The prices ranges from $40-$100 sometimes. Usually it is in the 60’s. Our oil is categorized to be of low quality, so it doesn’t even sale that much.

        The amount imposed by NCP is an attempt to maintain the 50% oil chair they have been getting.

        SPLM should start finding permanent alternatives. Relying on that pipeline is not good.

        What if war broke out in Sudan[north] in the future and all the infrastructure is destroyed including the pipeline? Is that is when we are going to start finding other alternatives. I hope that may not happen, but it is possible.

        Having Known the NCP folks , one can expect more frustrations in the future in terms of these ridiculous charges . They can even create another small pipeline on that main pipeline to steal some oil and put it in a reservoir or well for their own future use.

        Don’t trust these people, they are next to the devil in line.

        Ahmed Chol whatever begins anger, ends in shame

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        • 15 August 2011 11:10, by Shadrack Nuer Machut

          Bravo Ahmed Chol,

          I am impressed with your comments.

          Truly,Khartoum needs to mantain the lose of the oil share due brought by Sudan split into two states.

          The earlier to make decisions of avoidnig Khartoum based-pipeline the better we shall be.

          I hope our leaders won’t make mistakes by using this decisive routes of oil.

          The future of South Sudan is in the hand of the incumbent leaders anything that they make will reflect on the future generation accordingly.

          We ask them to think twice and seek decisions from God so that they are more vigilant and firm.

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        • 15 August 2011 15:35, by Loom

          Dear Ahmed

          I agree with you brother this pipeline is very dangerous as alot of burning issues are not solve between South and North Sudan at any minute our relation can easily run worse where they get chance to steal.

          I think south sudan have has no alternative that,s why inter into that malicious agreement.

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  • 15 August 2011 05:39, by Khartoum92

    What kinda of greedy government is this?? they don’t know how things work yet, when are they gonna learn. They want everything for free but that’s not how things work between countries. I am also asking isn’t the GOSS embarrassed by complaining that Gos is stopping all the north traders from exporting to the South, they know well those products they are getting from the North traders are subsidized by the north government, why don they buy it with international price. Once the trade embargo is gone they should pay international price

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    • 15 August 2011 06:27, by Jay

      Yes Khartoum ninety whatever, the Government of South Sudan doesn’t know how things work, can you please go and do business somewhere else?

      Is there anybody forcing you to do any business with South Sudan? Why are you try to do business with someone who had no idea of how things work?

      Please, the world is big enough go and find a smart country to do business with you!!

      Did you see now? who is the biggest clown here right now?

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      • 17 August 2011 04:12, by Jay

        No oil transit fee for 32 dollars a barrel?

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    • 15 August 2011 06:28, by bior angeth

      May be those who set that price do not know business or they think they working for the betterment of the North, but this act put them as enemies of South and north.They might not know what they are doing will hurt them economically. Claiming yourself to be smart while you are not is so dangerous. This act of showing oneself to be smart led to division of Sudan. Yet, they do not refrain from it. Continue with it; work for your downfall. Thanks.

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    • 15 August 2011 06:31, by Josh

      good lesson, if gov in ssudan respect ppl’s right then everything ll be possible.

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  • 15 August 2011 06:25, by Sundayw

    North is using the pipeline as a political weapon in its attempt to force South to become a subservient state. That is not going to happen. If North insists on collecting transit fees, it must charge a fee that is in line with economic analysis. South is willing to pay for the cost of transporting a barrel of oil. This cost is associated with labor, cost of pipeline, and associated taxes. This amount is equivalent to about $2.40/barrel.

    However, they are charging about ten times that amount and they have already budgeted this expected revenue. In other words, if South does not export any oil, North will also loose. So there is incentive for North to negotiate with South and at least get something than nothing. South is holding cards too on whether it wants its oil to go through north.

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    • 15 August 2011 07:22, by Ngailo

      Fellows,

      This issue of $32 a barrel is a pain in a ass.
      What we must do is to make urgent agreement with Kenya to divert our pipeline there.
      Better for a good ally to satisfy his belly with your wealth than for an enemy to gain advantage of it.

      Our government should race with time to put this bullying to a fullstop.

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  • 15 August 2011 07:24, by sebit

    My question is why President Kirr didn’t build alternative pipline through Kenya or somewhere else during CPA time just in case if south sudan brake away why he didn’t do that? Now is gonna take another two years to do that.

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  • 15 August 2011 08:21, by Nhomlawda

    They claim to implement strict Islamic law that punishes theft by limbs amputation and here they had been stealing South Sudan oil all along and no one amputated their limbs. Is that not ironical?

    Sudan Islamic fundamentalists, the real looters of South Sudan resources are so glued to looting and stealing of South Sudan oil till to the level they want to set their own international pipelines’ rates just because they do not want to accept lost of South Sudan oil resources.

    Pathetic creatures!

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    • 15 August 2011 09:04, by Cibaipiath Junub Sudan

      David and Goverment of RSS, please launch the project quickly so that Khartuom stop threatening you/us. Even if, it requires another 6years let us not accept what Khartuom imposed on us. We need to build a new pipe lines to Lamu. Two, we need to build local refinery here in South Sudan for subsistance.

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  • 22 August 2011 19:40, by Tambura

    That is what we call it lack of leadership and ideas, two days ago our president rejecte deal with those companies that want to construct pipeline to Kenya telling us it is good for us to work with northern and use their pipline. Now northern are asking for 32 USD for a barrel that mean 32%. We have to forget about Oil just for home use and constrate ourself in agriculture. When I will be president the first thing I will do I will start building the pipeline to Kenya right away better to pay half of that money to Kenyan than dealing with jellaba whom killed 2 millions of our people and stole our oil revenue. We can servive without oil for next five years we fought them for more than 50 years without oil.

    Peace

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