South Sudan Plans to Shut Down Crude Output Over Oil Dispute With Sudan

South Sudan plans to stop oil production after Sudan started seizing southern crude and demanded $32 per barrel in transport fees on shipments through its territory, Oil Minister Stephen Dhieu Dau said.

South Sudan told oil companies yesterday to prepare plans to shut down operations, Dau told reporters today in the capital, Juba. Sudan “has stolen” more than $350 million worth of oil in recent days and prevented $400 million in shipments from leaving the export terminal at Port Sudan.

South Sudan took control of about three-quarters of Sudan’s output of 490,000 barrels a day when it seceded in July. The crude is pumped mainly by China National Petroleum Corp. (CNPZ), Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp.

“Our people may best be served by keeping the oil in the ground,” Dau said. “At least then, it will still be there, either when Sudan is ready to deal with us fairly or when we have our own infrastructure that will ensure that the people reap the true benefits of their oil.”

The halt to output will take at least a week for technical reasons, and won’t happen until South Sudanese President Salva Kiir has met his Sudanese counterpart, Umar al-Bashir, in Ethiopia on Jan. 27, government spokesman Barnaba Marial Benjamin said by phone today. The two countries are currently negotiating oil issues in Addis Ababa.

Talks so far have failed to yield an agreement on the amount landlocked South Sudan will pay to transport its oil through a pipeline across Sudan to the Red Sea.

Sudan will continue to seize South Sudanese oil until the two sides reach agreement on the oil-transit fees, Sudanese Foreign Ministry spokesman al-Obeid Murawih told reporters in Khartoum on Jan. 18.

“South Sudan has the right to do whatever it wants with its crude oil,” Murawih said today by phone. “But we strongly believe that this is just a threat as a decision like this will harm South Sudan more than anyone else.”

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