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Oil pipeline through Ethiopia

June 29, 2011

(khaleejtimes) DUBAI – The breakaway region of Sudan, to be known from July 9 as the Republic of Southern Sudan (RoSS), is planning an oil pipeline through Ethiopia as one of its option to circumvent the 2005 oil sharing agreement with Khartoum, South Sudan’s oil minister Dr Luol Deng said in Dubai on Tuesday.

Producing more than 70 per cent of Sudan’s oil, the South Sudanese administration feels the 2005 agreement, which calls for a 50-50 sharing of oil revenue between the two entities, is unfair and cannot be implemented.

However, all the oil refineries, storage facilities and ports lie in the Khartoum controlled territory, which receives the crude through two pipelines.

“Oil sharing has been one of the highly contested issues between us (North and South) and we have had continuous discussion over this. For now we will continue with the current mechanism and use North’s facilities, but in the future as we gain independence and pump more oil these two pipelines would be insufficient, that is why we are planning to have another one through Ethiopia,” said Dr Deng.

As South Sudan becomes the latest entrant to the list of free countries, the oil rich nation’s top officials are working overtime to drum up support and investment from across the world, particularly for its much-sought after oil industry. Part of Vice-president Riek Machar’s entourage to the UAE, Dr Deng made his comments as he sought investments from UAE to boost his country’s fledgling economy.

He added that though South has more explored oil reserves, the North has greater potential reserves and should seek to explore those “rather than contesting with us over what we have.”

Explaining further why they can’t stick to the 2005 oil sharing agreement he said: “Currently Sudan is under sanctions and that impacts oil export, if we continue to stick with them then our revenues would also get affected. We have our priorities and we can’t let that happen, so we request North to explore their reserves. At the same time we have also requested the US to lift sanctions so that together we realise our potential fully.”

Currently, the combined production of Sudan’s oil is at 500,000 barrels per day — third in Sub-Saharan Africa behind Nigeria and Angola — and it is expected to jointly produce with the North one million barrels per day in the next five years.

Presently, South Sudan’s only source of income is oil and the administration feels the country has the resources to change that. The landlocked country has millions of acres of fertile land and importantly enough water to work the land as well. The Vice-President says the country has wildlife greater than those of Kenya and Tanzania — two countries famous for its wildlife tourism.

The country is also seeking investment to produce electricity and is currently in talks with UAE authorities in this regard. Courting investors he said that ownership laws in the country are lenient and lands and companies could be owned in totality or through joint venture, depending on the region and area of the country.

The UAE would be hosting an investment and trade conference on South Sudan in the month of October.


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