South Sudan plans to build a link to a pipeline in Kenya to export its oil after breaking away from the north today, a minister revealed to InsideKenyaToday on Wednesday.
The south will control 75 percent of the African country’s 500,000 barrels a day production beginning today.
So far, the underdeveloped south will have to rely on northern facilities such as its refineries and the only port to sell the oil, the lifeblood of north and south.
The announcement caused concern in Khartoum which was counting on the south at least paying it fees to transport southern oil through northern pipelines — to cushion the blow of losing the southern oil revenues.
Anthony Makana, minister of roads and transport, said the south was in talks with several oil firms to build a 200 kilometre long link to the existing South-Eldoret-Mombasa pipeline in Kenya.
“To build a pipeline is a very easy thing for us,” he told reporters in the southern capital Juba, putting the cost at a “few million dollars.”
He said such a pipeline would help the south to export its oil to African neighbours such as Kenya, Uganda, Congo, Rwanda, Burundi, Tanzania and Ethiopia.
Makana also said some oil fields contained more gas than oil, making it “economically viable to extract gas and then oil from some fields.” He gave no further details, including how long such a project might take.
The government has said in the past it was interested in finding new routes for its oil but so far failed to give concrete details.
Fractious relations in Sudan are set to be tested further as the now independent South appears to have chosen Kenya as a trade partner for its rich oil reserves.
The apparent pledge to hook up to a Kenyan pipeline may cause major disruption to oil production from today when the world gets its newest country.
South Sudan will break away from current day Sudan today following a referendum months ago in which the southerners declared to be independent and autonomus from the north.
Sudan’s President, Omar Bashir, recently threatened to turn the taps off on oil production from the South if it did not accede to demands to guarantee the North a cut of future oil revenues, or payment for using its downstream infrastructure.
The idea of exporting oil from the South through Uganda and Kenya has been floated, as has the idea of routing a pipeline through neighbouring Ethiopia and on through Djibouti.
Under the terms of a 2005 peace deal that ended decades of civil war with the north, South Sudan keeps half the revenues from oil drilled in its territory. However, as the deadline for secession draws near, the north is anxious to hammer out a deal to secure its financial future.
“I give the south three alternatives for the oil,” Bashir said at a rally in Khartoum in late June.
“The north is to continue getting its share, or the north gets fees for every barrel that the south sends to Port Sudan. If they don’t accept either of these, we’re going to block the pipeline.”
Sudan began exporting crude in late 1999. In 2009 it was estimate to be producing 486,700 barrels per day, putting it at 31st in the world in terms of producing countries, according to CIA information.
It has proven oil reserves of 6.8 billion barrels as of last year placing it number 20 on the world list, according to the CIA. Proven natural gas reserves last year stood at 84.95 billion cubic metres, according to the data.