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Sudan: High stakes, high diplomacy for a country split

AFRICA is due to welcome a new state in January, when South Sudan votes in a referendum for independence from the north – or, if the referendum is delayed, simply declares independence

But, while South Sudan's secession from the predominantly Arabic north of the country might help in nation-building – the two parts have been involved in decades of civil war – it immediately raises threats over the security of nearly 0.5bn barrels a day (b/d) of oil production.

With 80-90% of the country's oil deriving from fields in South Sudan, yet all of it exported by pipeline through the north to Port Sudan – and with both governments overwhelmingly dependent on oil revenues – the success, or failure, of the split would seem to hinge on both sides accepting a revenue-sharing formula. But, despite high-level international diplomatic efforts in recent months, no agreement has emerged.

Oil infrastructure in Sudan
Under the 2005 Comprehensive Peace Agreement, which called for the referendum in 2011, revenues are shared equally between north and south. That arrangement ends in January. For the moment, the government of South Sudan's ambitions for a proportional share of revenue are constrained by its reliance on the north's export infrastructure – but it has ambitions for the construction of a pipeline of its own.

A pipeline from the southern fields across Kenya to Lamu, on the coast, would give South Sudan an export route to the Indian Ocean and would tie-in with Kenya's plan to develop a port at Lamu to ease pressure on Mombasa. Earlier this year, Japan's Toyota Tsusho, a part of the Toyota car firm, detailed a proposal for the pipeline to the Kenyan government. The 1,400 km link, with a capacity of 450,000 b/d, would cost $1.5bn and would be handed over to the governments of Kenya and South Sudan after 20 years, Toyota Tsusho said.

South Sudan also has plans for a refinery, to free the new country from reliance on refineries in the north. Earlier this year bids were invited for the construction of a 50,000 b/d plant at Akon, in Warrap state, to be supplied with crude by pipeline from the Unity field. South Sudan's state-owned Nilepet will participate in the venture.

The political uncertainties have not been helpful towards South Sudan's attempts to extend its exploration effort, with only little-known companies signing-up for licences recently. Sudan's production averaged about 490,000 b/d in 2009 and is said to have declined this year, although allegations of under-reporting have been made in the past.

 

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