A NEW oil pipeline from South Sudan to Kenya would solidify its the country’s independence from the north, said a government minister in Juba today. Anthony Makana, the minister for roads and transport, said the 200 km link would run from Juba to Kisumu, to join an existing pipeline stretching to an export terminal in Mombasa, on Kenya’s eastern coast.
“A pipeline is a very easy thing for us,” he said. “All it takes are a few million dollars and then we can move our petroleum.” Makana added that South Sudan, which will gain independence from the North on 9 July (PE 2/11 p30), is already negotiating with unnamed companies to build the project. “All the companies want to build the pipeline. They are already in talks.”
Although he would not say when the pipeline would be built, the news will be another blow to the government of north Sudan in Khartoum. Independence for South Sudan will give the government in Juba control over about 75% of Sudan’s 486,000 barrels a day of oil production.
Until exports can be opened through Kenya, however, the South would have to rely on existing infrastructure taking its oil to Port Sudan, in the north.
Sudan’s President Omar Bashir has said crude-oil shipments through the north, allowing his government to collect transit fees, could be part of a peaceful settlement as the country splits in two. Last month, he warned the government in Juba that unless an oil-revenue-sharing deal were agreed, he would order the export line to Port Sudan to be shut down.
“I give the south three alternatives for the oil,” he said. “Either the north continues getting its share, or we get fees for every barrel that the south sends to Port Sudan.” If that were not accepted, he said, “we’re going to shut down the pipeline".
But in Juba today, Makana warned Bashir: “If they break the pipeline [to the North] it will only affect them.”
Financial crisis
The north faces a severe financial crisis if it is denied access to oil revenue, say analysts. The IMF said in April that a “permanent shock” would greet the country after the south’s independence, which will wipe away about 75% of the north’s oil-export revenues. This may partially be offset by the end of transfer payments to South Sudan. Under existing arrangements, the north transfers 50% of oil revenue to the government in Juba.
But access to capital will also grow trickier for the regime in Khartoum. Although Sudan has enjoyed good relations with China, its main oil buyer and investor, access to Western capital has been limited by sanctions.
In 2009, the International Criminal Court charged Bashir with war crimes against humanity, although he continues to travel with relative ease. Petroleum Economist understands he plans to attend a ceremony in Juba marking the south’s independence on Saturday, where he will be joined by Western and other dignitaries.
Fuel price surge
Fears that the north, which controls Sudan’s oil refineries and the supply of fuel to the south, will stop supplies of gasoline and diesel have prompted a price surge in Juba. Prices for gasoline have soared from around SD3 a litre ($1.10/l), to more than SD5/l. Most cars on the road now belong to Western aid and non-governmental organisations.
Meanwhile, the main road between Khartoum and Juba has been shut for more than a week as security is tightened in the country ahead of independence day. Mine-clearing groups have begun sweeping the main Juba areas, finding older ordnance left from the civil war. Anthea Pitt, Juba