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South Sudan’s oil pipeline construction will commence soon

June 14, 2012 (JUBA) – South Sudan may soon see commencement of implementation of an alternative vital joint oil pipeline project with Kenya that would transport the new nation’s crude oil to the international market and revive its staggering economy.

A worker walks at the power plant of an oil processing facility at an oilfield in Unity State April 22, 2012 (Reuters)

South Sudan shut down its oil production last January accusing its northern neighbor, Sudan, of stealing its oil which passed through Sudan’s pipelines to its Red Sea Port.

Khartoum justified the action, arguing that the new nation which broke away from it in July 2011 had not been paying transit fee.

The two sides have not reached an agreement on how much the transit fee should be as Khartoum asked for $36 a barrel while Juba offered over half a dollar per barrel, arguing that this was in accordance with the international practice.

South Sudan has exerted efforts to build an alternative oil pipeline through East Africa to the Indian Ocean and had recently signed a Memorandum of Understanding (MoU) with Kenya to build the pipeline.

A leading Japanese Toyota Tsusho Corporation has reported completion of feasibility study of the pipeline project and ready to sign contract with the government in order to commence the construction.

The Project General Manager of the company, Yoichiro Iwasaki, on Tuesday led a delegation to Juba and met with the South Sudan Vice President, Riek Machar, during which the company reported on the success of the feasibility study and readiness to enter into contract with the government.

The Vice President’s Press Secretary, James Gatdet Dak, told the Sudan Tribune that the company was ready to shoulder the financing of the project and will work out with the ministry of Petroleum and Mining in the contract a mechanism for repayment by the government.

Juba also plans to build another alternative pipeline through Ethiopia to the port in Djibouti and a separate MoU was also signed with the two concerned governments.

Related projects are also underway to build a number of refineries in South Sudan in order to provide fuel domestically and export its surplus products to the neighboring countries.

International oil companies assure of discovery of more oil reserves in South Sudan and predict that the oil production may quickly reach over 500,000 barrels a day from the current 350,000 in the next few years.

The shutdown of the oil production has affected the economy of South Sudan as it constituted 98% of the total annual revenues and was the only export item that used to bring in hard currency to the nation.

Khartoum’s economy has also suffered from the oil shutdown and shock of losing 50% share of South Sudan’s oil revenues after independence.

ST