x Abu Dhabi, UAEWednesday 24 January 2018

South Sudan pins hopes for growth on pipeline

Construction on a pipeline for South Sudanese oil could start in six months, says the government of the fledgling nation.

The economy of South Sudan, the world's youngest nation, which draws 99 per cent of its income from oil, is set to grow as plans for a pipeline bypassing the north progress.

Construction on a pipeline allowing South Sudanese oil to circumvent the north could start by July, boosting the fledgling nation's revenue and global oil supplies.

South Sudan has signed a memorandum of understanding with Ethiopia to build an oil pipeline running through Djibouti, and the government is in talks with a Texas pipeline construction company to start work in six months, said Barnaba Marial Benjamin, South Sudan's information minister. He did not identify the Texas company.

The plan for a pipeline through Ethiopia is the latest floated by the South Sudanese government in recent months. Another plan envisaging a pipeline snaking through Uganda to the Kenyan coast was under consideration by companies including Japan's Toyota and the French oil major Total, which holds exploration blocks in South Sudan.

"We had to look for alternative route for exporting the oil after we have reached a deadlock with Sudan, which is exaggerating in the oil transit fees," Mr Benjamin told the Chinese state news agency Xinhua recently.

Khartoum and the southern capital, Juba, have been embroiled in a dispute over oil export payments since South Sudan gained independence in July.

South Sudanese oil reaches international markets by only one conduit: the Greater Nile Oil Pipeline, which runs through Sudan to a port on the Red Sea.

Khartoum wants US$6 (Dh22) for every barrel of oil transported through the pipeline, while Juba is willing to pay only $1 a barrel and says Khartoum should also provide it with $2.4 billion in financial aid and withdraw its troops from Abyei, a flashpoint region on the border between the north and the south.

Last month, South Sudan halted its 350,000 barrels per day (bpd) oil production.

The shutdown has squeezed global crude supplies in a time of reduced output from Yemen, Syria and Libya.


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