---------- Forwarded message ---------- From: John Ashworth <[email protected]> Date: Wed, Nov 30, 2011 at 3:38 PM Subject: [sudan-john-ashworth] South Sudan oil To: Group <[email protected]>
1. Sudan has not stopped South Sudan oil exports -official Wed Nov 30, 2011 11:18am GMT By Aaron Maasho ADDIS ABABA Nov 30 (Reuters) - Sudan has not stopped South Sudan's oil exports and does not intend to, a Sudanese official said on Wednesday, two days after the acting oil minister said Sudan had halted South Sudanese government exports over a transit fee dispute. South Sudan split off into the world's newest nation on July 9, taking about three-quarters of the formerly united country's roughly 500,000 barrels per day of oil production with it. Oil is vital to both economies, but the two sides have not yet agreed on how much South Sudan - which must send its oil through pipelines in Sudan to a Red Sea port - should pay as a transit fee. On Monday, Sudan's acting oil minister, Ali Ahmed Osman, said his country had decided to halt South Sudan's oil exports - roughly 200,000 barrels per day - until the two sides came to an agreement. Sabir Mohamed Hassan, Sudan's co-chair of negotiations on economic issues, appeared to reverse that statement on Wednesday. "Exports will continue. We will not stop the flow of oil exports," he told reporters in Addis Ababa, where officials from both sides are meeting for talks. South Sudanse officials said on Monday two shipments had been held up or would be held up because of the decision, a 600,000 barrel shipment sold to China's Unipec and a 1 million barrel shipment sold to Vitol. Asked whether those shipments had loaded, Hassan said: "Most probably that amount is the amount we took in lieu of charges accumulated against the government of Sudan." Osman, Sudan's acting oil minister, said on Monday South Sudan already owed Sudan some $727 million in arrears. (Writing by Alexander Dziadosz; editing by James Jukwey) http://af.reuters.com/article/sudanNews/idAFL5E7MU2FH20111130 END1 2. S. Sudan "surprised" by oil export halt, seeks pipeline Tue Nov 29, 2011 2:33pm GMT * China urges resolution to the transit fee row * Dispute threatens to disrupt oil supplies from South Sudan * S. Sudan minister says proposing 5-year financial package (Recasts with South Sudan's oil minister comments) By Hereward Holland and Chris Buckley JUBA/BEIJING, Nov 29 (Reuters) - South Sudan's oil minister said on Tuesday Sudan's decision to halt the South's oil exports over a transit fee row would hurt both countries' oil interests, and that the South would keep seeking an alternative pipeline. China, a major buyer of oil from both countries, urged the governments to resolve the dispute. The row, which surfaced on Monday, has threatened to disrupt oil supplies from Africa's newest nation and is likely to complicate sensitive talks in Addis Ababa over unresolved issues related to South Sudan's secession in July. South Sudan's Oil Minister Stephen Dhieu Dau said Sudan's decision was "unfortunate" and, as a result, the new nation would reinvigorate efforts to build an alternative pipeline to decrease its dependence on Sudan's oil infrastructure. "We do not see a future in the oil infrastructure of the north. Our oil must have access to international markets. We should not be punished because we decided to secede," he told Reuters by telephone from the Ethiopian capital. South Sudan seceded on July 9, taking about three-quarters of the formerly united country's roughly 500,000 barrels per day (bpd) of oil output. The industry is vital to both economies. South Sudan's exports to China and elsewhere still have to pass through pipelines to a Red Sea port located in Sudan. The two sides have not agreed how much South Sudan should pay as a transit fee. Dhieu said South Sudan had proposed two alternatives to Sudan to help it plug an estimated $7.8 billion fiscal deficit over five years, a figure he said was calculated by the International Monetary Fund. The first was a $5.4 billion, five-year transitional financial package, half of which would include giving up some arrears South Sudan says it is owed. The second was a transit fee of not more than $0.75 per barrel. "We have offered to pay $2.6 billion over five years and forgiveness of arrears of $2.6 billion, for a deal in which we would not pay transit fees," Dhieu said. "This is the package of financial assistance we are offering to Khartoum, and while this is happening we were surprised by this unilateral decision. This unilateral action taken by Khartoum will have a negative impact on all of Sudan's oil interests." Sudan had been allowing South Sudan to export crude without a final deal in expectation the fees would be paid after an agreement, but decided to stop the exports - roughly 200,000 bpd - on Nov. 17, Sudan's acting oil minister, Ali Ahmed Osman said on Monday. Osman said South Sudan already owed Sudan some $727 million in arrears for the period between July 9 and the end of October. BEIJING'S BALANCING ACT China has sought to maintain good ties with both countries since South Sudan declared independence from its larger and long-dominant northern neighbour, despite the rancour. That balancing act is being tested by Monday's announcement. Chinese Foreign Ministry spokesman Hong Lei urged the two governments to avoid choking off oil supplies. "We believe that maintaining the normal production of oil is important for both South Sudan and Sudan," Hong told a daily briefing. "We hope that north and south Sudan will exercise reason and restraint, and use a flexible and pragmatic approach to resolve their problems through friendly consultation," he said. "We are confident that the two governments will abide by their promises, ensure the stability and continuity of oil cooperation, and protect the lawful rights of Chinese businesses and the safety of their personnel." By October, China's purchases of Sudanese crude appeared little affected, with imports in the first 10 months of this year up 5.5 percent on the year at 11.12 million tonnes, or about 5 percent of China's total crude oil imports. But a 600,000 barrel oil shipment sold by South Sudan to China's Unipec did not load as scheduled on Monday because of the decision to halt exports, South Sudanese officials said. In August, China's visiting Foreign Minister Yang Jiechi vowed that Beijing would support both Sudan and South Sudan and help both countries develop their oil industries. China maintained close economic and political ties with north Sudan throughout a U.S. trade embargo and also wants to reach out to the south, which decided to break away from Khartoum under a 2005 peace deal. (Additional reporting by Alexander Dziadosz in Khartoum; editing by James Jukwey) http://af.reuters.com/article/sudanNews/idAFL5E7MT4MS20111129?sp=true END2 3. South sees no future in Sudan oil infrastructure-min Tue Nov 29, 2011 12:12pm GMT * Blasts decision by Sudan to halt south's oil shipments * Offers Sudan $5.4 billion transitional financial package By Hereward Holland JUBA, Nov 29 (Reuters) - South Sudan will continue to press for a new oil pipeline because it does not see a future in Sudan's oil infrastructure, the oil minister said on Tuesday, a day after Sudan said it halted shipments of the South Sudanese government's oil at port. South Sudan took about three-quarters of the formerly united country's roughly 500,000 barrels per day of output when it seceded, but must still export its oil through pipelines running north to a Red Sea port in Sudan. The two sides are still negotiating a raft of issues in Addis Ababa related to the divorce of the two nations. South Sudan's oil minister Stephen Dhieu Dau said Khartoum's decision to halt shipments of oil sold by the government of South Sudan was "unfortunate" and would negatively affect all of Sudan's oil interests. "We do not see a future in the oil infrastructure of the north. Our oil must have access to international markets. We should not be punished because we decided to secede," Dhieu told Reuters by telephone from the Ethiopian capital. He said the new nation had offered Sudan a $5.4 billion transitional financial package for the next five years to help plug a $7.8 billion fiscal deficit caused by the split of the country in July, in line with a figure he said was calculated by the International Monetary Fund. "We have offered to pay $2.6 billion over five years and forgiveness of arrears of $2.6 billion, for a deal in which we would not pay transit fees," he said. "This is the package of financial assistance we are offering to Khartoum, and while this is happening we were surprised by this unilateral decision (to halt shipments of oil). This unilateral action taken by Khartoum will have negative impact on all of Sudan's oil interests." He said the alternative would be to pay a transit fee which would not be more than $0.75 per barrel. (Writing by Alexander Dziadosz; editing by James Jukwey) http://af.reuters.com/article/sudanNews/idAFL5E7MT29B20111129?sp=true END3 4. Beijing presses Sudanese to end oil row November 29, 2011 6:44 pm Financial Times By Javier Blas in London and Katrina Manson in Nairobi China, the largest buyer of Sudanese crude oil, is pressing Sudan and the newly independent South Sudan to end arow that has led to the blockade of about 200,000 barrels a day of crude oil and contributed to higher global oil prices. The rare intervention by Beijing, which last year bought two thirds of Sudan’s output, comes as Brent crude, the benchmark, surged above $110 a barrel.Oil analysts said that although the disruption is relatively small, the physical market is so tight after supply outages earlier this year in areas from Libya and Syria to the North Sea and Azerbaijan that the loss of crude has already been felt. Khartoum’s oil minister said the north would no longer export the southern government’s own share – about two thirds – of the 380,000bpd produced by South Sudan on Monday. The stoppage first affected a tanker bound to China chartered by the trading arm of state-owned Sinopec. The spat triggered a rare intervention by China on oil geopolitics, with Beijing urging both parties to dialogue. “Maintaining normal production of oil is important to both South Sudan and Sudan,” Chinese Foreign Ministry spokesman Hong Lei said. “We hope North and South Sudan can stay rational, show restraint, and resolve relevant problems through neighbourly pragmatism and friendly talks.” Analysts said the statement reflected the importance that China puts on Sudanese crude. “They [China] definitely offered to mediate and it’s certainly in their financial interests to,” said Dana Wilkins at Global Witness, who follows negotiations closely. Oil advisers from both sides had barely started negotiations in Addis Ababa, the Ethiopian capital, on Friday before the north announced the surprise move, escalating tensions. Arkangelo Okwang, director general of energy for South Sudan, told the Financial Times on Tuesday that storage capacity at the two terminals in Port Sudan was limited, raising the possibility that the south, which gained independence earlier this year, would be forced to cut output. “That will be a disaster if we are forced to stop production,” he said. Lawrence Eagles at JPMorgan said in a note to clients that the major concern was a long stoppage. “Both parties have an incentive to resolve this stoppage in short order. But as we have seen in prior disputes between Russia and the Ukraine this kind of dispute can either be resolved quickly, or can drag on for a month.” ICE January Brent rose to an intraday high of $111.00 a barrel. In later afternoon trading in London, the commodity traded at $110.66 a barrel, up $1.66 on the day. In New York, Nymex January WTI rose $1.36 to $99.57 a barrel. END4 5. China urges north and south Sudan to keep oil flowing Tue Nov 29, 2011 10:35am GMT BEIJING Nov 29 (Reuters) - China, a major buyer of oil from Sudan and South Sudan, urged the two governments on Tuesday to end a dispute over transit fees that led Sudan to halt the landlocked South's oil exports. Since southern Sudan seceded from its larger and long-dominant north in July, China has sought to maintain good ties with both countries, despite the rancour between them. But Beijing's balancing act is being tested by Sudan's Monday announcement that it had halted landlocked South Sudan's oil exports until the two sides agree on a transit fee, stepping up a row between the former civil war foes over how to untangle their once-integrated oil industries. South Sudan seceded on July 9, taking about three-quarters of the formerly united country's roughly 500,000 barrels per day (bpd) of oil production -- the lifeblood of both economies. Most Sudanese oil is located in South Sudan, but exports to China and elsewhere have to pass through pipelines and a seaport located in the north. Chinese Foreign Ministry spokesman Hong Lei urged the two governments to avoid choking off oil supplies. "We believe that maintaining the normal production of oil is important for both South Sudan and Sudan," Hong told a daily briefing. "We hope that north and south Sudan will exercise reason and restraint, and use a flexible and pragmatic approach to resolve their problems through friendly consultation," he said. "We are confident that the two governments will abide by their promises, ensure the stability and continuity of oil cooperation, and protect the lawful rights of Chinese businesses and the safety of their personnel." By October, China's purchases of Sudanese crude appeared little affected, with imports in the first 10 months of this year up 5.5 percent on the year at 11.12 million tonnes, or about 5 percent of China's total crude oil imports. Khartoum decided to stop the government of South Sudan's oil exports -- roughly 200,000 bpd -- on Nov. 17, Ali Ahmed Osman, Sudan's acting oil minister, told reporters on Monday. But he added that the pipeline was still running and international firms would not be affected. Sudan had been allowing South Sudan to continue exporting crude without a final agreement in expectations the fees would be paid after a deal. Osman said South Sudan already owed Sudan some $727 million in arrears for the period between July 9 and the end of October. Sudan had blocked a shipment of South Sudan's oil in August, and said it was asking for a transit fee of $32 per barrel. South Sudan rejects the figure as too high. Before South Sudan seceded, the two governments split revenues from southern oil roughly 50-50. In August, China's visiting Foreign Minister Yang Jiechi vowed that Beijing would support both Sudan and South Sudan and help both countries develop their oil industries. China maintained close economic and political ties with north Sudan throughout a U.S. trade embargo and also wants to reach out to the south, which decided to break away from Khartoum under a 2005 peace deal. (Reporting by Chris Buckley) http://af.reuters.com/article/sudanNews/idAFL4E7MT1O820111129?sp=true END5 6. South Sudan Minister Calls Sudan Oil Blockade Intimidation November 29, 2011, 6:32 AM EST By Jared Ferrie and Salma El Wardany Nov. 29 (Bloomberg) -- South Sudanese Oil Minister Stephen Dhieu Dau rejected Sudan’s blockade of its crude exports as an “intimidation tactic.” The authorities in Khartoum owe South Sudan $5 billion in arrears for shipments before it gained independence and taxes and other revenue collected since then, he said today in a telephone interview from Juba, the capital. Sudan’s government announced yesterday it halted exports by South Sudan, claiming it’s owed $727 million for earlier shipments. “It’s a figure that has no basis,” Dau said. “This is actually an intimidation tactic so that in the negotiations South Sudan would panic.” African Union-sponsored negotiations between the two countries began in Addis Ababa, Ethiopia’s capital, on Nov. 21 over issues including the oil fees the south should pay to ship crude through the north and the disputed region of Abyei. While South Sudan took control of about three-quarters of the former state’s output of 490,000 barrels a day when it seceded on July 9, it relies on the north for access to refining and an export terminal on the Red Sea. “Sudan is trying to make the south pay for its economic failure by increasing fees on oil,” Fouad Hikmat, the special adviser on Sudan for the Brussels-based International Crisis Group, said today by phone from Addis Ababa. “The north is trying to use threats as a pressuring tactic on the south during the ongoing negotiations.” Share Seizure The halt to exports comes after South Sudan announced in a presidential decree on Nov. 8 that it seized the shares held by Sudapet, Sudan’s state-owned petroleum company, in joint operations with companies including China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd and India’s Oil & Natural Gas Corp. China today urged the two sides to reach agreement in negotiations. “Maintaining normal production of oil is important to both South Sudan and Sudan,” Chinese Foreign Ministry spokesman Hong Lei told reporters today in Beijing. “We hope North and South Sudan can stay rational, show restraint, and resolve relevant problems through neighborly pragmatism and friendly talks.” South Sudan’s deputy petroleum minister, Elizabeth Bol, said yesterday the blockade prevented a shipment of 600,000 barrels of Nile-blend crude from being delivered to China International United Petroleum & Chemical Corp. A shipment of 1 million barrels of Dar blend oil to Geneva-based Vitol SA may also be at risk if the blockade continues, she said. China Concerned “China is very pragmatic and the statement means it’s really concerned what Sudan did and about the stability in the region which might harm the interests of Chinese investment,” he said. South Sudan’s government is studying the feasibility of building a new pipeline to export oil via its East African neighbours, rather than using Sudan’s oil pipeline that runs to Port Sudan on the Red Sea, the government said last week. Southern officials have said previously they are considering building a pipeline that would carry crude to the Kenyan port of Lamu. --With assistance from William Bi in Beijing. Editors: Karl Maier, Paul Richardson END6 7. Sweden Runs Into South Sudanese Oilgate By Jared Ferrie JUBA, Nov 29 (IPS) – Civil society leaders in South Sudan are closely watching a legal battle unfolding in Sweden, as prosecutors investigate an oil company accused of involvement in massive human rights abuses here. James Ninrew vividly remembers the day Sudan’s military attacked his community, which had the misfortune of living above vast oil reserves consigned to a consortium led by the Swedish oil giant, Lundin Oil. "They used helicopter gunships to bomb houses," the reverend and civil society leader recalled of the January 2000 attack, in Koch, Unity state. An elderly man and his wife were killed in the attack. "When the houses were on fire, the helicopter gunship landed and the soldiers came out and shot these people." Such accusations form part of the basis of a report that has recently prompted Sweden’s public prosecutor, Magnus Elving, to launch an investigation that could lead to a criminal case against Lundin Oil. The 2010 report by the European Coalition on Oil in Sudan (ECOS) alleges that Lundin may be culpable for atrocities committed against civilians by military and militia forces in areas where it operated. Lundin headed a consortium that included Malaysian, Sudanese and Austrian companies, which signed an oil contract with the government in 1997. "The start of oil exploitation set off a vicious war in the area," according to the report, which says almost 200,000 people were forced from their land and thousands were killed, while other crimes included arson, looting, rape and torture. "The forced displacement was motivated by the desire to secure oil fields for the purpose of exploitation," said ECOS. The report called on Sweden, Austria and Malaysia to investigate whether the companies "may have been complicit in the commission of war crimes and crimes against humanity." Although Elving has not named Lundin as the subject of his investigation, he has stated publicly that it was prompted by the ECOS report. Prosecutors have begun interviewing 40 people who have not been named. At the time of the alleged crimes, Lundin’s board of directors included Sweden’s current foreign minister, Carl Bildt. Elving has told Swedish media that Bildt is not among the 40, but refused to comment on whether he could be questioned later in the investigation. Lundin has repeatedly rejected allegations made by ECOS. "There is no new evidence in this report; it essentially reiterates inferences, insinuations and false allegations based on partisan and misleading information," Ian Lundin, chair of the board of directors wrote in a letter to shareholders after the release of the report. In 2003, Lundin commissioned a paper to refute allegations that it had been involved in human rights abuses. The paper pointed out that Lundin consulted community leaders as well as local and central government officials before undertaking operations. The company determined that an oil industry would be of benefit to local communities, and it spent 1.7 million dollars in three years on development projects. Kathelijne Schenkel of ECOS said in an interview that most of those consulted by Lundin were in fact "important military-political leaders in the area who at the time were allies of the Government in Khartoum." She called the 1.7 million dollars Lundin spent on development a "ridiculous sum" compared to the damages it brought to the area. "Lundin sold its stake in 2003 at 142.5 million dollars, cashing in on a 100 million dollars net profit," said Schenkel. Lundin has argued that it operated under the assumption that oil wealth could help bring peace to a country that was in the midst of a two-decade civil war, which ended in 2005 and led to South Sudan declaring independence this past July. "During the period in which the company was active in Sudan, it operated in the belief that oil could benefit the economic development of the area and the country as a whole, and that this would have a catalysing effect on the peace process," wrote Christine Batruch in the 2003 paper produced by Lundin. ECOS rejected the argument that the company could have been ignorant of the massive human rights abuses that accompanied that start of oil operations. The report points out that Lundin had been involved in the oil business in Sudan for six years before it signed a deal with the government to explore the area known as Block 5A. By that time the government had a brutal reputation for targeting civilians "as a means of warfare and to secure oil operations". Ninrew said the brutal and systematic nature of the government’s operations in advance of the oil industry was obvious to anyone in the area. The government would begin by indiscriminant bombing, driving many from their homes. This would be followed by helicopter gunships flying low in order to attack those that remained. "The third step was sending ground troops coming in vehicles and coming on foot to make sure no more people were there," said Ninrew. Soldiers would then establish posts just beyond the area they wanted to control, he said. After that, the machinery and the surveyors would arrive. Once they were done their work, the pattern would be repeated as the oil company expanded into territory falling under its concession. Ninrew said he hopes the investigation in Sweden will lead to a criminal case, although he pointed out that it would not necessarily mean compensation. He said the Swedish government should pressure Lundin to compensate affected communities by building schools, clinics and roads. Ninrew said that even if compensation is not forthcoming, a criminal case against Lundin could have the benefit of preventing future abuses. "It may serve as a lesson to other companies that want to come to South Sudan and other countries in Africa," he said. "We want to put an end to those oil companies coming to an area and doing whatever they like without the consent of the local people living in the place." END7 8. Sudan Blocks South Sudanese Oil Exports Via Its Pipelines November 28, 2011, 11:56 AM EST By Salma El Wardany and Jared Ferrie Nov. 28 (Bloomberg) -- Sudan blocked oil exports from South Sudan via its pipelines and will only allow them to resume once a bilateral agreement has been reached on payment for the shipments, Sudanese Oil Minister Ali Ahmed Osman said. Exports were stopped on Nov. 17, Osman told reporters today in Khartoum, the capital. Last month, Sudan threatened to block shipments unless an accord on transit fees and revenue sharing was agreed. South Sudan owes its northern neighbour $727 million for the August to November period, according to Osman. “We consider it as a sign of irresponsible anger which does not show any sense of leadership in the government of Sudan,” South Sudan Deputy Petroleum Minister Elizabeth Bol told reporters today in Juba, the South Sudanese capital. Landlocked South Sudan is trying to end its reliance on the north by talking to companies about building an export pipeline through Kenya, according to the U.S. Energy Information Administration. While South Sudan took control of about three- quarters of the former state’s output of 490,000 barrels a day when it seceded in July, it relies on the north for access to refining and an export terminal on the Red Sea. Bol said the blockade prevented a shipment of 600,000 barrels of Nile-blend crude from being delivered to China International United Petroleum & Chemical Corp. A shipment of 1 million barrels of Dar blend oil to Geneva-based Vitol SA may also be at risk if the blockade continues, Bol said. Row Over Shares The halt to exports comes after South Sudan announced in a presidential decree on Nov. 8 that it seized the shares held by Sudapet, Sudan’s state-owned petroleum company, in joint operations with companies including China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd and India’s Oil & Natural Gas Corp. Sudan may sue over the seizure, Osman said. “Seizing the company’s shares is completely illegal and Sudan has the right to sue the government in international courts,” he said. South Sudan on Nov. 21 defended its decision to take control of the shares, calling it a “legitimate act of sovereignty.” African Union-sponsored negotiations between the two countries began on Nov. 21 over issues including the oil fees the south should pay to ship crude through the north and the disputed region of Abyei. Southern Sudan’s government is studying the feasibility of building a new pipeline to export oil via its East African neighbours, rather than using Sudan’s oil pipeline that runs to Port Sudan on the Red Sea, the government said last week. Southern officials have said previously they are considering building a pipeline that would carry crude to the Kenyan port of Lamu. END8 9. Sudan Demands $15 Billion in Compensation for Lost Southern Oil November 23, 2011, 10:38 AM EST By Jared Ferrie Nov. 22 (Bloomberg) -- Sudan is demanding $15 billion in compensation for lost oil revenues after South Sudan’s independence and doesn’t want the African Union to mediate negotiations with the south, said Pagan Amum, South Sudan’s chief negotiator. “They want the south to shoulder the responsibility to compensate them for all the consequences of secession,” Amum, secretary-general of the south’s ruling Sudan People’s Liberation Front, told reporters today in Juba, the capital. While Sudan says it needs $15 billion over seven years to make up for the lost revenue, the International Monetary Fund, the African Union and South Sudan have agreed on a figure of $5.4 billion, he said. Sudan’s Foreign Ministry spokesman, Al- Obaid Murawih, said by phone in Khartoum that he couldn’t immediately comment on Amum’s statement. When it gained independence on July 9, South Sudan assumed control of about 75 percent of Sudan’s previous daily oil output of 490,000 barrels, pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp. President Umar al-Bashir’s government no longer wants the African Union to mediate negotiations with the south and says that the talks should be bilateral, Amum said. The latest round of talks on oil fees South Sudan should pay the north for the use of its export facilities and the disputed region of Abyei were postponed from their scheduled start yesterday in Addis Ababa, Ethiopia. The African Union-appointed mediator for the talks, former South African President Thabo Mbeki, left Juba today after meeting with South Sudanese officials. Al-Bashir’s government has informed the parties that it will contact South Sudan about the start of bilateral negotiations, Amum said. South Sudan gained its independence following a two-decade civil war with the north that ended in 2005. END9 10. Sudan denies halting South Sudan oil exports as China condemns move November 29, 2011 (KHARTOUM) – The Sudanese government on Tuesday appeared to reverse a decision it announced yesterday by which oil exports from South Sudan passing through the north’s pipelines would come to a halt. The foreign ministry spokesperson Al-Obaid Marawih told reporters in Khartoum that South Sudan’s will still be able to export its oil through its territories until both countries reach an agreement on fees that should be assessed for using the pipelines and refineries. Marawih also denied any intention to block exports of oil from Sudan’s southern neighbor. Yesterday the Sudanese state minister of petroleum Ali Ahmed Osman announced that Khartoum will no longer allow South Sudan to transfer its oil all the way to Port Sudan on the Red Sea until it clears its financial arrears. Osman claimed that South Sudan owes $727 million on four shipments of oil released and transferred through the oil installations in the north. The foreign ministry spokesperson today said that his country is determined to get a percentage of South Sudan’s oil exports even if no agreement has been reached on transit fees but without forcibly sealing off the pipelines. "It is possible later to reach an account settlement regarding the dues and obligations [of each side]," he said. Last July South Sudan became the world’s newest country after voting for independence in a January vote, taking with it three-quarters of the former united country’s roughly 500,000 barrels per day of oil production. The two countries are negotiating the oil issue in Ethiopia. According to the foreign ministry three options were tabled in Addis Ababa by the African Union mediation team led by former South African president Thabo Mbeki including that each side would assist the other economically. Mbeki on his end suggested that a compromise by which Khartoum gets a percentage of annual oil exports that would include the transit fees to help Sudan overcome the current economic crisis. In return for that Sudan would facilitate border trade and open ports for the flow of goods to South Sudan. Sudan proposed that the south pay $10.5 billion during the next five years but Mbeki’s team and the International Monetary Fund (IMF) put the figure at $7.4 billion. Neither of the numbers was agreed on. According to Marawih, Sudan informed Mbeki that it cannot keep exporting south’s oil indefinitely without any financial return. China made a rare intervention today on the new development with its ambassador in Khartoum slamming news of blocking South Sudan’s oil exports. The Chinese ambassador in Sudan Luo Xiaoguang described Khartoum’s decision as “very serious and unjustified”. Xiaoguang further told the pro-government al-Rayaam newspaper that there is no reason to stop the exporting of oil as long as there are negotiations now underway between the two countries in Addis Ababa. He expressed hope that Sudan would reconsider its decision and called on the Government of Southern Sudan to engage in serious dialogue to reach agreement on outstanding issues particularly the oil dossier. The Chinese foreign ministry echoed its envoy’s statements. “Maintaining normal production of oil is important to both South Sudan and Sudan,” Chinese Foreign Ministry spokesman Hong Lei said. “We hope North and South Sudan can stay rational, show restraint, and resolve relevant problems through neighborly pragmatism and friendly talks” he added. China depends for nearly five percent of its oil imports on South Sudan, a new country long suspicious of Beijing’s ties with Khartoum. The state-run China National Petroleum Corporation (CNPC) has pumped billions of dollars into developing oilfields in Sudan, 80 percent of which lie in the south. A South Sudan oil official said yesterday that a 600,000 barrel oil shipment sold by South Sudan to China’s Unipec did not load as scheduled on Monday because of Sudan’s decision. A 1 million barrel oil shipment sold to trading house Vitol is due to load on Tuesday but will not "unless there is a change of mind today," Macar Aciek Ader, undersecretary at South Sudan’s ministry of petroleum and mining, told Reuters. "We were supposed to load 600,000 barrels today, but it didn’t load," he said by telephone, adding the buyer was Unipec, trading arm of China’s top refiner Sinopec Corp. ALTERNATIVE PIPELINE In Juba an official said that South Sudan will continue to look for alternative pipeline to export its oil. “We do not see a future in the oil infrastructure of the north. Our oil must have access to international markets. We should not be punished because we decided to secede," Stephen Dhieu Dau, the South Sudanese oil minister told Reuters by telephone from the Ethiopian capital. Minister Dau reportedly added his country had offered Sudan a $5.4 billion transitional financial package for the next five years to help close a $7.8 billion fiscal deficit caused by the split of the country in July, in line with a figure he said was calculated by the IMF. "We have offered to pay $2.6 billion over five years and forgiveness of arrears of $2.6 billion, for a deal in which we would not pay transit fees," he said. "This is the package of financial assistance we are offering to Khartoum, and while this is happening we were surprised by this unilateral decision [to halt shipments of oil]. This unilateral action taken by Khartoum will have negative impact on all of Sudan’s oil interests” Dau added. He said the alternative would be to pay a transit fee which would not be more than $0.75 per barrel. Reacting to the statement by the Sudanese government, Sudan Tribune reached out to voices from members of the public in South Sudan capital Juba on Tuesday and caught up with both ordinary and public figures. “We are not surprised. This is indeed a known behavior of the Khartoum. It is a political decision which our government and people should take seriously. It is a not a one man’s decision. It is a decision taken by the whole government of the National Congress Party”, Garang Mawien Dut, a member of the South Sudan’s ruling party, the Sudan People’s Liberation Movement (SPLM) told Sudan Tribune on Tuesday at South Sudan Hotel. Dut claimed the decision to stop oil shipments was tactically done by the Sudanese government to put on South Sudanese government to concede in the ongoing discussions which resumed last week in the Ethiopian capital of Addis Ababa on post independence issues. The official added the decision taken by Khartoum was only affecting bilateral ties but also the lives of the ordinary people because want to unite the south with North by all means because it has of oil wells. “Building a new pipeline is contingent upon the following conditions or factors: 1) The quantity and quality of the old and new oil deposits on the ground in South Sudan 2) Estimated cost for remaining oil deposits 3) Environmental suitability and feasibility of building pipelines from Unity State and Upper Nile to Kenya 4) Availability of skilled workers”. “These factors, he said, have to be closely examined to determine whether South Sudan is better off building new pipelines or paying plausible transit fees to the Sudan because Building new pipelines is not economically feasible at this time given that we do not have abundant reserves and our crude oil is not of high quality”. Ater K. Thiep, a member of Warrap State Legislative Assembly in a separate interview added that another factor which may make a potential engineering firm hesitant about taking any risk undertaking such expensive project would a political understanding between the companies and the government of south Sudan. “We have a lot of competing priorities now for our government which requires capital. This is why Khartoum is stuck on the demand to share the oil with us because they know our alternative pipeline would be costly, he adds. The legislator said there are available three options 1) Pay Khartoum the transit fees it is demanding; 2) Sell our oil to the Chinese firm at lower price and ask them to ship it as theirs; 3) Refuse to do any of the above and borrow huge money from the international monetary institutions in return of paying high interests as South Sudan continues explore the feasibility of building pipelines or railways. (ST) http://www.sudantribune.com/Sudan-denies-halting-South-Sudan,40861 END10 ______________________ John Ashworth Sudan Advisor [email protected] +254 725 926 297 (Kenya mobile) +211 919 695 362 (South Sudan mobile) +27 82 853 3556 (South Africa mobile) +44 750 304 1790 (UK/international) +88 216 4334 0735 (Thuraya satphone) PO Box 52002 - 00200, Nairobi, Kenya This is a personal e-mail address and the contents do not necessarily reflect the views of any organisation -- The content of this message does not necessarily reflect John Ashworth's views. Unless explicitly stated otherwise, John Ashworth is not the author of the content and the source is always cited. You received this message because you are subscribed to the Google Groups "sudan-john-ashworth" group. 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