South Sudan to Truck Oil Through Ethiopia, Djibouti for Export

South Sudan Deputy Petroleum Minister Elizabeth James Bol
Photo: South Sudan Deputy Petroleum Minister Elizabeth James Bol

An accord signed on March 12 in the Ethiopian capital, Addis Ababa, envisages crude being exported via Djibouti’s Red Sea port of Douraleh, South Sudan Deputy Petroleum Minister Elizabeth James Bol said in an interview today.

By William Lloyd George
March 14, 2013

South Sudan’s government said it signed an agreement with Ethiopia and Djibouti that may enable the East African nation to export oil by truck from July, while a study on a pipeline linking the three countries is completed.

An accord signed on March 12 in the Ethiopian capital, Addis Ababa, envisages crude being exported via Djibouti’s Red Sea port of Douraleh, South Sudan Deputy Petroleum Minister Elizabeth James Bol said in an interview today. Douraleh is 1,469 kilometers (913 miles) northeast of Juba, the South Sudanese capital.

“We need to wait for a technical assessment to be done first, but Ethiopia and Djibouti agreed for the oil to be exported by trucks through their countries,” Bol said.

South Sudan is considering building two pipelines, one via Ethiopia and another across Kenya to the port of Lamu, as an alternative to the conduit that runs through neighboring Sudan. South Sudan halted oil production in January 2012 after accusing Sudan’s government of stealing $815 million worth of its crude, a charge the Khartoum administration denied. The two nations agreed on March 12 to resume production and exports.

ILF Consulting Engineers of Germany has been asked by South Sudan, Djibouti and Ethiopia to carry out a feasibility study on the plan to export oil by truck, Bol said. The study will examine issues including the suitability of the countries’ roads and is expected to be completed in four months, she said.

ILF’s main focus will be to assess the feasibility and engineering plan for the pipeline to Douraleh, Bol said.
“The long-term goal is the pipeline,” she said. “Sending the oil by truck is only a short-term measure till the pipeline is finished.”

South Sudan seceded from Sudan in July 2011, taking control of about three-quarters of the formerly united country’s output of 490,000 barrels of oil a day. Oil in South Sudan is pumped mainly by China National Petroleum Corp., Petroliam Nasional Bhd of Malaysia and India’s Oil & Natural Gas Corp. (ONGC)

To contact the reporter on this story: Paul Richardson in Nairobi at pmrichardson@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

Source: Bloomberg News

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Related News

Sudan, South Sudan agree to start oil flow within two weeks

Addis Ababa, March 13 (WIC) – Sudan and South Sudan have agreed to order the resumption of the flow of southern oil exports through pipelines in Sudan within two weeks.

The agreement came during the negotiations that were going on at the same time as the signing of the action plan on the implementation of security issues last week.

Sudan’s chief negotiator, Idris Mohammed Abdel Gadir, signed a deal with his South Sudanese counterpart, Pagan Amum, setting out a timeline for resumption of oil after four days of African Union-brokered talks in Addis Ababa.

The AU High Level Implementation Panel Chairman, President Thabo Mbeki, who is mediating between the two sides, told reporters that the orders for resumption will be given to companies on “D-day (March 10th) plus 14.”

Meanwhile, according to an armed forces spokesperson, as agreed under the action plan, South Sudan’s President Salva Kiir has given orders for South Sudanese troop withdrawals from the Safe Demilitarized Zone.

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South Sudan to build oil pipeline via Ethiopia

In bid to secure an alternative outlet to its primary export commodity-crude oil, the government of South Sudan has approved a road map to construct an oil pipeline that passes through Ethiopia on its way to the port of Djibouti.

An information that come out of the South Sudanese cabinet meeting last Friday disclosed that the government has decided to pursue Port Djibouti as its alternative route for its crude oil export. And the first step toward that was to approve a road project that connects the oil-rich district of Faluje to the a boarder town in Gambella Regional State.

Following the referendum that marked the birth of South Sudan as the newest state in the horn of Africa, the new government has been preoccupied with issue of managing its immense oil resource and building the war-thorn nation. However, even after the referendum, things did not get any easier for South Sudanese since they walked away with 75 percent of the oil resources, which once was a major sources of export revenue for the whole Sudan. Since then, the South have accused the Sudan of creating problems to export its crude oil product via Port Sudan, which stands as the most feasible export outlet from South Sudan’s vantage point.

However, after intense negotiations, an accord was reached between the two sides that culminated in the signing of a cooperative agreement on a range of issues including oil export. According to South Sudanese government the agreement have not been fully implemented to date, and hence it has to look into alternatives to exploit its most valued natural resource.

Finally, the cabinet has decided to fast track the road project that would connect Faluje with a boarder town of Palag, following an intensives discussion with regional and federal governments of Ethiopia. From Ethiopia’s side, the construction of the road that would connect with the Faluja-Palag road has already been constructed, according to Gatluwat Tut, vice president of Gambella Regional State. Apart from its use as alternative route to oil export, the road is also considered to be vital to accelerate border trade exchange between the two countries.

Barnaba Marial, spokesperson for the South Sudanese government, on his part, says that the road projects was approved after an intensive discussion between the two sides; and the economic advantage of the road has made it very attractive.

“So far, the trade ties have remained to be limited since the road on other side was not completed. It is a right decision at a right time,” Gatluwat comments.

Source: The Reporter

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South Sudan Oil Exports Expected To Reach Global Markets In May

March 14, 2013

VENTURES AFRICA – South Sudan’s crude-oil exports are expected to reach the international market by May, Wall Street Journal (WSJ) reported on Wednesday, citing a top official at the national oil company.

The official made this comment a day after the government signed an agreement with Sudan signaling their commitment to resuming shipments from the South through Sudanese pipelines, the respected financial daily reported.

A May resumption of exports is “within the spectrum and that is expected,” said the official, who asked WSJ not to name him, as oil production hadn’t restarted yet.

The official said the national oil company, Nilepet, could gradually restart oil flows at short notice, but some uncertainties remain since the company hasn’t yet received an official order to resume production.

“More technical discussion has to take place prior to the startup,” WSJ quoted the official as having said.

Analysts and traders have been doubtful at the pace with which South Sudan could begin oil exports through war-damaged oil facilities.

The International Energy Agency said Wednesday in its monthly report on oil markets that South Sudanese production could restart as soon as May, one month earlier than it had previously forecast.

It said production could reach about 220.000 barrels a day by the end of the year, still below the country’s pre-independence capacity of 350.000 barrels a day.

It is understood that officials on Tuesday said Sudan and South Sudan had reached a deal that could see crude shipments from South Sudan start flowing through Sudanese pipelines and ports within two weeks.

South Sudan last January stopped its crude oil shipments, estimated at roughly 350.000 barrels a day. This was right in the middle of a fight with its northern neighbor over oil transit fees and a border dispute.

Source: VENTURE AFRICA

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South Sudan Oil Pipes to Cross Ethiopia

Ethiopia will benefit from being paid by the barrel, as well as saving on oil transportation costs.

Aboubaker Omar Hadi, Elizabeth James Bol, and Abraham Tekeste
Photo: Aboubaker Omar Hadi, Elizabeth James Bol, and Abraham Tekeste.

Ethiopia is to be a pass way for the oil pipeline that South Sudan is set to construct, in order to export its cruel oil through the Djibouti Red Sea port of Douraleh.

The government of Ethiopia signed a memorandum of understanding on March 12, 2013, at the Hilton Hotel, with South Sudan and Djibouti, for the construction of the pipeline. Abrahame Tekeste (PhD), state minister for Finance & Economic Development; Elizabeth James Bol, deputy minister of Petroleum & Mining for South Sudan and Aboubaker Omar Hadi, chairman of Ports & Free Zones Authority of Djibouti, agreed that South Sudan will export oil via Djibouti’s port, 1,469Km north-east of Juba, after crossing Ethiopia.

Exporting crude oil by trucks through Djibouti is designed as a temporary response, until the pipelines are reopened for service, a senior official disclosed to Fortune.

The American consultancy firm, which will be conducting the study, has hired 10 consultants from different countries, such as the United States,Germany and England. The study, which will examine issues, including; the suitability of the country’s roads, the cost of construction and the environmental impact of the pipeline, will be completed in the coming three months.

The safety of Ethiopian historical sites along the route of the pipeline will also be considered.

“If the pipeline is not installed with care, it will cause very serious harm to the environment,” Wassihun Abate, head of the legal department of MoFED, said.

Ethiopia will be paid per barrel for each one that passes through its land. Although, how much will be determined after the feasibility study for the construction of the pipeline is completed, Wasihun told Fortune.

South Sudan has a similar agreement with Kenya, which it entered into on August 2012, for the construction of a pipeline that will pass through there. The pipeline will go up to Lamu Port, passing through Kenya’s Lapsset border. Known as the Lamu Corridor, it will connect the port town of Lamu to Ethiopia and, ultimately, South Sudan.

South Sudan is to transport between 700,000 to one million barrels of crude oil to other countries via the proposed Lamu Corridor. The pipeline will cover 2,000 Km, at an estimated cost of six billion Birr.

Ethiopia will get oil delivered to its doorstep and save money that had been budgeted for transportation, Wasihun told Fortune.

In the 2010/2011 fiscal year,Ethiopia imported 1.9 million metric tonnes of petroleum for 26 billion Br. For the next year, imports rose to 2.1 million metric tonnes at a cost of 31.8 billion Br.

South Sudan is expected to resume oil exports in the next two weeks, after coming to an agreement with Sudanon March 12, 2013, in Addis Abeba. Oil production has been halted for over a year, due to border disputes and disagreements about oil fees.

South Sudan seceded from Sudan in July 2011, taking control of about three-quarters of the formerly united country’s output of 490,000 barrels of oil a day.