South Sudan signs oil pipeline deal

2012-02-09 16:25

Juba - South Sudan signed a agreement to build an oil pipeline to the port of Djibouti via neighbouring Ethiopia, officials said on Thursday, after Juba shut down its only export route via former foe Sudan.

"We signed an agreement for another pipeline to go through Ethiopia and onto Djibouti," South Sudan's Minister for Information Barnaba Marial Benjamin told AFP.

A memorandum of understanding was signed during talks in the Ethiopian capital Addis Ababa earlier this month, and Chinese, American and European companies had shown interest in carrying out feasibility studies for its construction, he said.

"The pipeline will be owned by the Government of South Sudan," Benjamin added.

However, industry experts have said that building a pipeline could take three years or more and be extremely costly to complete. They have already criticised a separate deal last month to build a pipeline from South Sudan to the Kenyan coast.

Djibouti, on the Gulf of Aden and the entrance to the Red Sea, lies at least 1 000km from South Sudan's oil fields, and crosses remote areas rife with rebel forces.

But a pipeline would free land-locked South Sudan on its dependence of exporting oil through its northern neighbour and former civil war enemy Sudan, from which it split last July after decades of bloody conflict.

Crucial facilities

The oil-rich but grossly underdeveloped South lacks the infrastructure to refine and export oil.

Crucial facilities including a pipeline and Red Sea export terminal remain in Sudan, leaving the two states arguing bitterly over how much the South should pay to use the infrastructure.

Juba made a complete shutdown of oil production last month despite it making up some 98 percent of its revenue, amid a deepening row with Khartoum over pipeline fees.

It accuses Khartoum of stealing $815m of its crude and building a pipeline to illegally siphon off oil.

The agreement last month with Kenya set out plans to build a pipeline to the coast at Lamu, where a new deep water port is planned.

Fresh talks between Juba and Khartoum over the oil crisis are slated to begin on Friday in Addis Ababa.