South Sudan signs new pipeline deal

Amid a deepening oil crisis and following months of disputes, landlocked South Sudan has signed a second oil pipeline deal in a bid to reduce its dependence on Sudan.

Currently, the only export route for southern oil – which makes up 98% of its budget – is via its northern neighbour. Last month, South Sudan stopped production in a transit fees row and accused Khartoum of stealing its oil.

Now, the latest plan is to build a pipeline to the port of Djibouti on the Red Sea via neighbouring Ethiopia.

According to South Sudan's Minister for Information, Barnaba Marial Benjamin, a memorandum of understanding was signed recently during talks in the Ethiopian capital, Addis Ababa.

Chinese, US and European companies have shown interest in carrying out feasibility studies, Mr Benjamin said.

Crossing remote, difficult terrain where South Sudanese and other militia groups operate, Djibouti – on the Gulf of Aden at the entrance to the Red Sea – is at least 1000 km (625 miles) away from South Sudan's oilfields.

Last month, South Sudan's government signed a deal with Kenya to link its oil fields to the port of Lamu. Industry analysts say such a pipeline would usually take at least three years to build and cost up to US$ 4 billion (£2.6 billion).

The two Sudans - who fought a bitter civil war for decades and split in last July - remain at odds, especially over the oil on which both countries depend almost entirely for their revenues. Following the split, the south has the bulk of the oil – but the north has the pipeline, refinery and the export terminal at Port Sudan on the Red Sea.

The two countries have never agreed on the transit fees that the south should pay Khartoum for pumping oil through its pipelines and using Sudan's oil export infrastructure. This is an area which has seen much argument recently, culminating in President Salva Kiir of South Sudan recently accusing Sudan of stealing crude oil worth US$ 815 million (£518 million).

Khartoum has admitted to confiscating some for unpaid fees – prompting South Sudan to halt all production. President Kiir said his nation would rather struggle for a bit than continue to hand over its oil revenues to the old enemies in Khartoum.

Fresh talks over the oil crisis are scheduled for the near future in Addis Ababa.

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