South Sudan confirms delay to oil exports

by on November 21, 2012 10:08 am BST

The landlocked, newly-independent state shut down its oil
output of roughly 350,000 barrels per day in January in a dispute with Khartoum
over how much it should pay to export oil through Sudan to the Red Sea.

In September, the two forged an interim pact after a protracted talks
process on oil export fees and improving border security, opening the way to
resuming crude exports, the lifeline of both economies.

On Monday, Sudan denied intentionally delaying the trade but
said the two sides had not yet agreed on how to demilitarise their border – a
condition for resuming oil flows.

Local newspaper reports suggesting the restart would be
delayed have sent the Sudanese pound to a historic low against the dollar in
the past few days, highlighting the importance to restart oil exports.

Speaking in Upper Nile state on Tuesday Kiir suggested the
delay was related to rebellions in two Sudanese regions – Blue Nile state and
the Nuba Mountains in South Kordofan state.

“We were supposed to resume oil production on 15
November, five days ago. Suddenly Khartoum people changed their minds, saying
we must denounce the Nuba Mountains and Blue Nile,” Kiir said, according to Reuters reports.

Kiir gave no new date for restarting oil output, which had
been expected to hit export markets by the end of December or early January after
works to restart the pipelines.

Kiir earlier set the foundation stone for South Sudan’s
first refinery with a capacity of 10,000 barrels a day, in a drive to lower
dependency from Sudan’s oil facilities.

Khartoum accuses Juba of backing the rebel Sudan People’s
Liberation Movement North, some of whom were displaced into South Sudan after
partition, but South Sudan denies this.

Sudan and South Sudan agreed in September to set up a 10-kilometer
(6 mile) border zone from which both armies would withdraw, but a recent pickup
in fighting has hampered plans.

Both Sudan and South Sudan – which split apart under a 2005
peace deal – depend heavily on oil for government revenues and foreign
currency, with inflation having hit 45% in Sudan and South Sudan banking on oil
for 98% of its state revenues.