---------- Forwarded message ---------- From: John Ashworth <[email protected]> Date: Sun, Dec 4, 2011 at 11:31 AM Subject: [sudan-john-ashworth] The oil mess To: Group <[email protected]>
1. Sudan says it will seize South Sudanese oil as talks fail Posted on Wednesday, 11.30.11 Alan Boswell MCCLATCHY NEWSPAPERS ADDIS ABABA, Ethiopia — Sudan vowed Wednesday to confiscate a portion of South Sudan's oil as it passes through a pipeline in Sudan as talks between the countries failed to produce any agreement on how to split oil revenues. Sudanese officials defended the action as a reasonable step to bolster their country's flailing economy, which lost access to oil production facilities earlier this year when South Sudan became independent. Several months of negotiations have failed to produce a deal on how much South Sudan should pay to move its oil north through a pipeline that runs through Sudan. South Sudan denounced Sudan's plan, and mediators from other African nations expressed frustration that six days of talks hadn't ended in an agreement. Former South African President Thabo Mbeki oversaw the talks. Sudan said it would take only a portion of South Sudan's oil and that the rest would be allowed to flow to ships for export. South Sudan's chief negotiator, Pagan Amum, called the solution "extortion" and "looting" and said no agreement had been reached because Sudan was asking for too much. According to South Sudanese officials, two shipments totaling 1.6 million barrels were delayed in Port Sudan but the ships have since been loaded and were expected to be released soon. One of those shipments belonged to a Chinese oil firm, prompting a rare public reproach by the Chinese Foreign Ministry in Beijing, urging both sides to keep the oil flowing. Sudan pledged to continue negotiating, and said it wouldn't block shipments of South Sudanese oil. "We are never going to shut down the pipeline. We will take from the oil in kind what we deem to be our dues," Said al Khatib, a senior member of the Sudanese delegation, said in an interview Wednesday. "We will stick to what we feel is our fair share." Sudan won't grab more than 30 percent of the oil, Khatib said. Another member of the Sudanese delegation said it probably would be around 23 percent. International reaction is still uncertain. By the time the oil reaches Sudanese territory, the South Sudanese government already has sold it to a third-party buyer. Amum said he doubted that Sudan could stop foreign companies from claiming their paid-for commodity, and that he considered the latest news merely an intimidation tactic. Sudan's Khatib said that would be a problem South Sudan would have to sort out with its business partners. "This is something that they have been notified of. So when they sell, they know now that whatever they sell, some of that is ours. So they need to make that clear to the buyers," Khatib said. http://www.miamiherald.com/2011/11/30/2525680/sudan-says-it-will-seize-south.html END1 2. Sudan says to take quarter of south's oil, as talks fail By Simon Martelli (AFP) –01/12/11 KHARTOUM, Sudan — Sudan will take 23 percent of the south's vital oil exports as payment in kind, after talks in Addis Ababa failed, but will not block Juba's exports, Sudanese officials said on Wednesday. "In the interim period, we are not going to charge the full fee. We will deduct about 23 percent as payment in kind," a senior oil ministry official told AFP, speaking on condition of anonymity. Khartoum and Juba are locked in a bitter row over how much the landlocked south, which won independence in July and produces some 75 percent of the country's 450,000 barrels per day of oil, owes to use the north's infrastructure. The Sudanese government pledged in a statement earlier not to block southern exports. "The Government of Sudan has not, and will not, stop or impede the flow and export of the Republic of South Sudan," it said, after five days of negotiations in the Ethiopian capital ended in deadlock. But Sudan's unilateral decision to syphon off southern crude is likely to heighten tensions, with the south's chief negotiator, Pagan Amum, threatening to take legal action if the north "steals" its oil. "If the GOS (government of Sudan) does steal South Sudan oil, or if others try to purchase the south?s stolen oil from the GOS, the Republic of South Sudan will take all legal measures necessary," he said in a statement. He accused Khartoum of taking the south's oil revenues for May, June, and July. Sudan's oil ministry said on Monday that it had blocked southern exports, claiming then that the Juba government had failed to pay transit fees of $727 million covering the period from July until the end of October. The announcement provoked a hostile response from Juba, and the escalating dispute prompted China, the largest foreign investor and main buyer of Sudanese oil, to urge both sides to "exercise restraint" in their negotiations. Khartoum's chief negotiator on economic issues, Sabir Mohamed Hassan, after returning from the African Union-brokered talks in Ethiopia, emphasised that southern exports would be allowed to continue. But he said the failure of the south to pay its fees was aggravating the economic difficulties facing the north. "We have told them that we have a responsibility to take our dues in kind, and that is exactly what has happened in the past few days," he told reporters. The Khartoum delegation said Juba blocked an AU proposal to charge the south $300 million over the next two months for continuing to export its crude. Further underlining the lack of progress on this increasingly rancorous issue, Hassan said Sudan was looking to charge the south $36 per barrel for the use of its oil infrastructure, in contrast to a southern offer of 70 cents. Southern oil minister Stephen Dhieu Dau rejected the north's fee as "extortionate." "This is extortionate to us. It's discriminatory and it's not based on a cost principle," he said on his return from the negotiations. The south says it will have to shut in its oil production next week if Khartoum prevents southern oil cargoes from lifting, due to a lack of storage facilities at the Port Sudan export terminal. "If by December 6 there is no lifting, then we will have to shut down production," oil ministry undersecretary Machar Aciek said. Both countries depend heavily on their oil revenues, which make up some 98 percent of the Juba government's income, and provided 90 percent of Sudan's hard currency earnings before partition, causing its currency to devaluate sharply since July. Southern officials have repeatedly discussed building an alternative export pipeline, probably through Kenya, but experts say this is not commercially feasible unless big new discoveries are made. Oil is one of a number of sensitive issues, including border demarcation, debt and the future status of the contested Abyei region, that the two sides failed to resolve ahead of the south's secession. Analysts warn that the longer they fail to strike an agreement, the more difficult the negotiations are likely to become. The next round of oil talks is due to take place in Juba on December 20. http://www.google.com/hostednews/afp/article/ALeqM5jP4vPdyX5OlV7wPgHT_rCv-ut4kQ?docId=CNG.85a35c9c6af40ba247ab9ea982e58b0d.de1 END2 3. South Sudan threatens to suspend oil production if north imposes charges unilaterally November 30, 2011 (JUBA) – The South Sudan government on Wednesday reacted negatively to reports that Sudan plans to take 23% of the new country’s oil exports, saying it will consider suspending oil production if north Sudan continues to impose high transportation and refinery costs. Agence France Presse (AFP) quoted an anonymous senior official at north Sudan’s oil ministry as saying, "In the interim period, we are not going to charge the full fee. We will deduct about 23 percent as payment in kind." Talks between the North and South collapsed once again on Wednesday after the African Union High Panel Implementation (AUHIP) failed to resolve differences between two the countries. Speaking to Sudan Tribune shortly after his arrival from the Ethiopian capital Addis Ababa, Stephen Dhieu Dau, South Sudan’s oil minister said no agreement has been reached on what his landlocked country would pay as charges to Khartoum. After South Sudan’s independence in July, the only way to export oil has been through north Sudan. The new country has been pondering building a pipeline that runs through neighboring Kenya will but analysts say it will take years to build. “To the best of my knowledge, there was no agreement on charges. The Sudanese delegation did not accept our proposal. They insisted on demanding $36 dollar per barrel. This was very expensive charge to accept. So we reject their demand because it is discriminatory. It is not a charged based on a cost principle," Dau said. “This is a clear discrimination. They are [Khartoum] demanding charges not based on any principle. This was [why we] did not reach any compromise because they were not negotiating with us”, said the senior member of the delegation. Attempts by Sudan Tribune to reach Pagan Amum, the Secretary General of South Sudan’s ruling Sudan People’s Liberation Movement (SPLM) and the leader of Juba’s delegation failed on Wednesday evening. His aides said he was tired and resting. Dau said that if Khartoum did not change its stance, South Sudan may be forced to stop exporting oil through north Sudan. This week Khartoum announced that it would stop allowing South Sudanese oil to be exported through Port Sudan but then appeared to reverse its position. Sudan’s oil ministry said on Monday that it had blocked southern exports, claiming the Juba government had failed to pay transit fees of $727 million covering the period from July until the end of October. But a foreign ministry spokesperson said that north Sudan was determined to get a percentage of South Sudan’s oil exports even if no agreement has been reached on transit fees but without forcibly closing the pipelines. Less than five months ago South Sudan became the world’s newest country after voting for independence in a January vote, taking with it three-quarters of the country’s oil. “There is no immediate alternative. The only option which I think will not be in the best interest of both the north and us is to suspend oil production because there are no storage facilities at the Port Sudan export terminal”, Dau said. The oil minister said his government did not want to stop exporting oil but said that it was an option if Khartoum continues to prevent oil from leaving the Port Sudan and reaching the international market. In such a situation, “the only option will lead to full shutdown”, Dau said. But Sabir Mohamed Hassan, Khartoum’s chief negotiator on economic issues claimed, after returning from the talks in Ethiopia, that the south was in fact continuing to ship its oil through the north. "The south has access [to our facilities] and it will continue to export, and it is in our interests that they continue to export through our territory," he told a news conference. "[But] we’ve told them that we have a responsibility to take our dues in kind, and that is exactly what has happened in the past few days," he added. Khartoum and Juba are locked in a bitter dispute over how much the south, which gained independence in July and produced some 75 percent of the country’s 450,000-500,000 barrels of oil per day before independence, should pay to use the north’s infrastructure. The escalating dispute prompted China, the largest foreign investor and main buyer of Sudanese oil, to urge both sides on Tuesday to "exercise restraint" in their negotiations. 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 in remarks published yesterday 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. (ST) http://www.sudantribune.com/South-Sudan-threatens-to-suspend,40871 END3 4. South Sudan and Sudan at loggerheads over oil talks BY ALAN BOSWELL Posted on Tuesday, 11.22.11 MCCLATCHY NEWSPAPERS NAIROBI, Kenya — The South Sudanese government has seized what had been Sudan's share of the south's oil production and has decided to build a new pipeline that would not cross through Sudanese territory, the latest sign that the two former war foes are unlikely to resolve by negotiation the issues created when South Sudan became an independent country this summer. South Sudan's leader, President Salva Kiir, issued the order divesting Sudapet, Sudan's national oil company, of its shares in South Sudan's oilfields and transferring them to Nilepet, South Sudan's state-owned firm, on Nov. 7. But the government didn't announce the action until last week and didn't offer clarification of its plans until Tuesday. The government said the decision will be imposed retroactively to July 9, the date of South Sudan's independence, meaning that South Sudan will seek to have Sudan repay any money Sudapet had received after that date. Sudapet had a 5 percent to 8 percent share in South Sudan's production blocks. South Sudan says its revenue from oil sales will total $3.2 billion for the final six months of 2011. "The Republic of South Sudan is making it clear that this new nation and not Khartoum or another entity shall control the management of its natural resources," South Sudan's ministry of petroleum and mining said in a statement. Khartoum is the capital of Sudan. Sudan's official Sudan News Agency called the move an "astonishment" and urged South Sudan to "reconsider this step that would negatively affect the progress and atmosphere of the negotiations." On Tuesday in Juba, South Sudan's capital, Oil Minister Stephen Dhieu Dau made clear his government would not roll back the action. "They have a right to talk and to raise their concern, but we are here as a sovereign country," he said. "We are not concerned to listen to such statements." The move came as months-long negotiations over resolving sensitive disagreements between the two countries appear stalled, with mediators struggling even to bring the two sides together into the same room. A new round of talks sponsored by the African Union and mediated by former South African President Thabo Mbeki did not start as scheduled this week in the Ethiopian capital of Addis Ababa and may not take place at all. South Sudan claims that the automatic divestment of Sudapet in its territory was already assumed through pre-secession negotiations. However, the issue was formally expected to be resolved through the Mbeki-led negotiations as part of a wider package that also addresses oil export fees and disputed border territories. The fact that the Juba government decided to simply bypass the African Union forum could be a sign that both capitals are beginning to look past the negotiation phase toward what actions they can take on their own. But analysts say that when it comes down to the multibillion-dollar per year oil industry South Sudan took with it when it seceded, the two sides really have no choice but to work together — even if there is little political will on either side to do so. South Sudan currently can export its oil only through a pipeline and refinery facilities that lie in Sudanese territory. Sudan could seize the oil as it flows through the pipeline, but it might not be able to sell it because international buyers might view it as a stolen commodity. "It wouldn't be smart to go too far with these unilateral actions," said Kathelijne Schenkel, an official at the European Coalition on Oil in Sudan, who said both sides need the oil to keep flowing. Most of South Sudan's oil is heavily acidic, requiring specialized refining capabilities that exist only in China and Japan outside the major Western players. Both countries would have incentives not to buy such contested oil, given the likely consequences. China is the most heavily invested outside player in South Sudan's oil industry. In the long term, South Sudan says it wants to build its own pipeline through a friendlier country to the east or south, most likely Kenya. Barring future oil discoveries, most experts doubt the plan's dollars and cents add up. In addition, a future pipeline does little to solve today's dilemmas. "It's still very much a literal pipe dream for these projects. They would take years," said Adelaide Schwartz, an analyst for Stratfor, a private intelligence company based in Austin, Texas. Schenkel said it would be a mistake to underestimate the resolve of the South Sudanese to free their oil industry from their hated rival's hands, however. "All the analysts say the pipeline has to be economically feasible. Of course, it has to be, but maybe not to the extent that the analysts are thinking, because they (South Sudanese) really want to get rid of that connection to the north. If they see a way, they will do it," she said. http://www.miamiherald.com/2011/11/22/v-fullstory/2514867/south-sudan-and-sudan-at-loggerheads.html END4 5. S. Sudan warns oil companies over illegal deals with Sudan By Julius N. Uma December 1, 2011 (JUBA) - South Sudan warned all foreign oil companies, the oil consortia and pipeline operators in the country not to cooperate with Sudan on crude oil-related matters, unless authorized. The directive was contained in a press release issued by the South Sudan’s petroleum and mining ministry following reports of Sudan’s apparent intention to confiscate 23% of the south’s entitlement oil allegedly as payment in kind for pipeline and transit fees. “The government of South Sudan will not tolerate any public or private party operating in South Sudan or providing services to South Sudan to act in any way complicit in the theft of South Sudan’s oil,” partly reads the statement signed by Stephen Dhieu Dau, the petroleum and mining minister. Describing Sudan’s intended move as an “illegal act”, Dau, urged northern government to “refrain from any hostile act and reconsider its position regarding the $5.4bn package and not to deprive Sudanese citizens from the benefit this assistance provides”. The Petroleum minister described as “blatantly false” allegations that South Sudan was not paying for the use of Sudan’s pipelines or other oil-related infrastructure, adding that these accusations are contrary to the established contractual and legal structures, including the principles of international law. Meanwhile, the ministry also warned potential buyers of crude oil illegally obtained from South Sudan, saying the southern government will take legal actions against all parties involved in the said transaction. On Wednesday, South Sudan government reacted negatively to reports that Sudan plans to take 23% of the new country’s oil exports, saying it will consider suspending oil production if north Sudan continues to impose high transportation and refinery costs. Talks between the North and South collapsed once again on Wednesday after the African Union High Panel Implementation (AUHIP) failed to resolve differences between two the countries. The AUHIP proposed 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 suggested 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. The head of Sudan’s delegation Sabir Mohamed al-Hassan accused the south of involving other issues at the oil negotiations such as Abyei and border demarcation. Al-Hassan further said that they put oil treatment cost at $6 and after adding transit fees, the cost of transportation and port charges and after taking into account the changes in oil prices it would all add up to $36 per barrel He revealed that South Sudan rejected the figures on the grounds that the oil pipeline was constructed using the south’s oil money. "We did not move forward in the negotiations because of the lack of clarity of vision with the other side," al-Hassan said. After South Sudan’s independence in July, the only way to export oil has been through north Sudan. The new country has been pondering building a pipeline that runs through neighboring Kenya will but analysts say it will take years to build. (ST) http://www.sudantribune.com/S-Sudan-warns-oil-companies-over,40880 END5 ______________________ 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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