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South Sudan and Kenya have signed an agreement to build an oil pipeline connected to the Kenyan port Lamu.
South Sudan and Kenya have signed an agreement to build an oil pipeline to the Kenyan port, Lamu, in hopes of potentially reducing dependence on its neighbor Sudan, the BBC reported.
The pipeline would link South Sudan’s oil fields to the port and should be ready in the next year, the BBC reported. Construction will begin once “sources of funding are made available,” according to Barnaba Marial Benjamin, spokesman for South Sudan’s government, Bloomberg BusinessWeek reported.
Still, industry analysts told the BBC it would take at least three years to build this oil pipeline and could cost up to $4 billion.
"The pipeline will be developed through Kenyan territory and will be built and owned by South Sudan," the Kenyan government said in a statement without giving details, Reuters reported.
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According to Benjamin, there is increased need for the pipeline since South Sudan started shutting down oil production on Jan. 22 because Khartoum is confiscating its crude and demanding a high transportation fee of $32 per barrel, Bloomberg BusinessWeek reported. As of last week South Sudan said it would stop its oil production due to these increased fees.
Juba, South Sudan’s capital, started shutting down its output of 350,000 barrels a day already, Reuters reported. Analysts have said Sudan’s demands for increased fees from South Sudan are way outside the international norms. The relationship between Sudan and South Sudan has become increasingly strained since South Sudan broke away in July.
A date has yet to be set for the project, but Elizabeth James Bol, South Sudan’s deputy minister for petroleum and mining, expects it to take 11 months.
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