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South Sudan says cutting oil flows on Sudan's insistence

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(Globalpost/GlobalPost)

By Andrew Green

JUBA (Reuters) - South Sudan has reduced its oil output and plans to shut it off completely after northern neighbor Sudan insisted production be shut down by August 7, officials said, over allegations of support for rebels that operate across their border.

Sudan said a month ago it would close two cross-border oil pipelines within two months unless South Sudan, its former civil war foe, gave up support for the rebels. Juba denies this.

The move is a blow to the economies of both sides, which were hit hard by South Sudan's 16-month oil shutdown in a row over pipeline fees and disputed territory. Flows of oil, the lifeline for both, had only resumed in April.

South Sudan has cut output to 160,000 barrels per day (bpd) from 200,000 bpd, officials of its foreign affairs and oil ministries said.

"The reduction started yesterday," Foreign Affairs ministry spokesman Mawien Makol Arik said.

"It is going to go down gradually until it goes off," he said. "This is a decision made by Khartoum ... still accusing us of supporting rebels, which is a position we denied. We said we don't do that."

He said South Sudan had called on China, which dominates the oil industry in both countries, to mediate between the two countries, which fought one of Africa's longest civil wars until 2005. South Sudan became an independent country in 2011.

Sudanese officials could not be immediately reached for comment.

Landlocked South Sudan needs to export its crude through the Sudanese port of Port Sudan. Both countries restarted oil flows in April after South Sudan shut its entire production of around 300,000 bpd in January 2012 as disputes over oil fees, border security and territory escalated.

Sudan allowed the sale of oil that had already reached its territory after it informed Juba in June it would halt flows unless support for rebels stopped.

Khartoum accuses Juba of supporting the "Sudanese Revolutionary Front", an umbrella of groups operating in the borderlands, which complain of neglect at the hands of the wealthy Arab Khartoum elites.

South Sudan in turn accuses Sudan of backing rebels in its Jonglei state, where escalating fighting is making it impossible to realize government plans to search for oil with the help of France's Total and U.S. Exxon Mobil.

The main foreign firms operating oilfields in South Sudan are China National Petroleum Corp, Malaysia's Petronas and Indian firm ONCG Videsh.

(Reporting by Andrew Green; Writing by Ulf Laessing and Alexander Dziadosz; Editing by Jane Baird)

http://www.globalpost.com/dispatch/news/thomson-reuters/130718/south-sudan-says-cutting-oil-flows-sudans-insistence