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Sudan says S. Sudan oil exports to resume by end May

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(Globalpost/GlobalPost)

South Sudanese oil will be shipped again from Sudan by the end of May, official media said, after a shutdown of more than a year which cost both impoverished nations billions of dollars.

"Sudan and South Sudan agreed to start oil pumping in mid-April and the exportation by the end of May," the official SUNA news agency said in a brief dispatch late Friday which gave no further details.

South Sudan halted crude production in early 2012, cutting off most of its revenue after accusing Khartoum of theft in a row over export fees.

China was the biggest buyer of the oil.

At talks in Addis Ababa last month, Sudan and South Sudan finally settled on detailed timetables to ease tensions, after months of intermittent border clashes, by resuming the oil flows and implementing eight other key pacts.

The deals had remained dormant after signing in September as Khartoum pushed for guarantees that South Sudan would no longer back rebels fighting in South Kordofan and Blue Nile states.

But since timetables were agreed, official delegations from the two countries have held a series of meetings to begin implementing the oil accord and other pacts.

The first crude would come from South Sudan's Block 5A operated by Sudd Petroleum Operating Company (SPOC), a joint venture between Malaysia's Petronas and South Sudan's government, said Sudan's undersecretary at the petroleum ministry, Awad Abdul Fatah.

"The stage is set for this to flow smoothly to the Sudanese border and flow together with oil coming from Sudan to Port Sudan," he said in the South Sudanese capital Juba on Thursday.

He told AFP that oil will be turned on well-by-well in a gradual process but some "is already flowing".

"This small amount will reach Port Sudan at the end of May," Fatah said.

Block 5A is southeast of Bentiu in the South's Unity State. In 2011 the block produced about 15,000 barrels of crude per day, according to the US government's Energy Information Administration.

The bulk of South Sudan's production is to resume at other fields, in the country's northeast, and should reach Sudan's border around the "end of May, beginning of June", Fatah added.

Following an independence referendum, South Sudan split from the north in 2011 with roughly 75 percent of the 470,000 barrels per day of crude produced by the formerly unified country.

The separation, under a peace deal which ended 23 years of civil war, left Khartoum without most of its export earnings and half of its fiscal revenues.

As a result, the pound currency plunged in value on the black market while inflation rose to more than 40 percent, where it remains.

Refineries and export pipelines stayed under Khartoum's jurisdiction but the two countries could not agree on how much Juba should pay to use that infrastructure, including the Port Sudan export terminal.

South Sudan said petroleum provided 98 percent of its revenue.

The oil deal is worth $1 billion-$1.5 billion annually in transit fees and other payments for Sudan, an international economist has estimated.

Billions more dollars would reach South Sudan from its oil sales.

The timetable document said operators must resume the oil flow "in a technically and environmentally sound manner and in accordance with international best practice".

China National Petroleum Corporation (CNPC) is a major investor in South Sudan's oil.

"Hopefully, when all is done and all is back to normal working, I think we will be receiving oil from South Sudan in the range of 250,000-350,000 barrels of oil a day," Fatah said.

Since the timetable agreement brought a more positive tone in relations with its neighbour, Sudan's currency has strengthened from a low of around seven pounds on the widely used black market.

The currency now trades at just above six for one US dollar.

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http://www.globalpost.com/dispatch/news/afp/130406/sudan-says-s-sudan-oil-exports-resume-end-may-0