Sudans Agree To Resume Oil Exports Within Three Weeks
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Former civil war foes Sudan and South Sudan on Tuesday agreed to restart joint crude oil exports with the next three weeks, reported Reuters, after production had abruptly been shut more than a year ago over a bitter dispute regarding pipeline fees.
Former civil war foes Sudan and South Sudan on Tuesday agreed to restart joint crude oil exports with the next three weeks, reported Reuters, after production had abruptly been shut more than a year ago over a bitter dispute regarding pipeline fees.
Leaders from the two countries, met in Addis Ababa, Ethiopia, under the supervision of the African Union, where they signed the agreement allowing South Sudan oil to pass through Sudanese pipelines, before being exported via the Port of Sudan.
According to the Wall Street Journal, the key factor in the pact was an agreement from both countries to pull back troops along the countries’ poorly marked, but oil-rich, 1,120-mile border; while the two countries also agreed on oil transit fees, as well as a compensatory package from the South for being allowed to secede back in 2011.
Related: South Sudan Makes $3.2 Billion Peace Offer To Sudan
Related: Sudan, South Sudan Agree To Set Up “Demilitarised Buffer Zone”
Speaking to reporters after returning from Addis Ababa, South Sudan’s Petroleum and Mining Minister Stephen Dhieu Dau said that there were only a few technical barriers to overcome before resuming oil output.
[quote]”We assume that we will resume as soon as possible,” he said, adding that the two countries had already ordered oil companies to restart production within two weeks of “D-Day”, given as Sunday, March 10.[/quote]The oil deal comes after months, under the mediation of former South African President Thabo Mbeki, where neither party seemed to be willing to back down. Last September, in a, the presidents of Sudan and South Sudan agreed in principle to multiple economic and security agreements, including setting timelines for demilitarizing the border and resuming South Sudan’s oil exports.
Late Tuesday, AFP reported that Sudan’s President Omar al-Bashir had accepted an invitation by his counterpart, Salva Kiir, to visit South Sudan, for an inter-governmental summit.
African Union Commission chief Nkosazana Dlamini-Zuma said in a statement that the summit would be “the next step in cementing mutually cooperative relations between them.”
In a statement, the United States State Department also expressed optimism at the new agreement; but Susan E. Rice, the American ambassador to the United Nations, expressed caution, especially given the two nations’ troubled history.
[quote]“There have been many agreements signed but too few actually implemented,” said Rice, as cited by New York Times. The importance of agreements, she said, was that “they are not just signed and touted but in fact implemented in real terms promptly on the ground.”[/quote]Related: South Sudan-Israel Oil Deals Raise Ire In Khartoum
Related: South Sudan Examining Alternative Oil Pipeline Routes: Report
Related: Sudan Eyes New Gold Rush To Compensate For Loss of Oil
Some two million people died in Sudan’s decades-long north-south civil war, which ended with a 2005 peace deal that paved the way for the South’s secession. Samson Wassara, a professor of political science at Juba University, speculated that the agreement had been the result of increasing economic strain for both sides since the shutdown.
[quote]”This time, I think the parties are agreeing under diplomatic pressure, but also under economic pressure and local political pressure,” Wassara said, noting that oil used to account for 98 percent of South Sudan’s government revenues.[/quote]Sudan has been suffering too – the IMF predicted that its economy shrank by 11 percent in 2012 because of the loss of oil revenue following the South’s secession. According to the BBC, Sudan’s government was also growing increasingly worried of a “Sudanese Summer”, akin to the “Arab Spring”, due to a rise in street protests.
Michael Poulsen, an oil analyst at Global Risk Management, urged markets to adopt a more pragmatic view towards the new agreement.
“Depending on the security situation, six months time is probably a more suitable time frame [for restart],” told Poulsen to WSJ.
[quote]”In the broader perspective, it should put a small tent in prices, but as long as Saudi Arabia has this must extra spare capacity, it will not have a major impact,” he added.[/quote]
