South Sudan to build crude pipe thru E Africa-Xinhua

BEIJING, Jan 21 (Reuters) - South Sudan is planning to
construct an oil refinery and a crude oil export pipeline
through East Africa with the help of international oil companies
operating in its fields, China's state-run Xinhua news agency
reported on Saturday.

The landlocked new nation earlier threatened to cut off
crude output within two weeks, after it said its northern
neighbour had begun seizing crude to compensate for what
Khartoum called unpaid transit fees.

"We had to look for alternative route for exporting the oil
after we have reached a deadlock with Sudan, which is
exaggerating in the oil transit fees," Barnaba Benjamin, South
Sudan's information minister and government spokesman, told
Xinhua.

"We have started practical steps to rapidly construct a
pipeline through eastern Africa, namely via Kenya and Uganda. We
expect the pipeline to be completed in 10 months. We will also
begin immediately the construction of a refinery in South
Sudan."

The Chinese foreign ministry had earlier on Saturday urged
"calm and restraint" over the dispute, which began in
November. The two neighbours together rank as the
seventh-largest supplier of crude oil to China, accounting for 5
percent of its imports in 2011.

South Sudan has floated the idea of an East African pipeline
before, but outside experts say barriers include the geography
to be traversed as well as the need to ensure enough production
volume to fill the pipeline in future.

International oil firms currently operating in South Sudan
would construct the pipeline and refinery, Xinhua cited Benjamin
as saying. It did not specify which.

Oil firms active in South Sudan include Chinese state-owned
China National Oil Corp., or CNPC, and Sinopec, Malaysia's
state-owned Petronas, and Oil and Natural Gas Corp of
India, or ONGC.

(Reporting By Lucy Hornby; Editing by Alison Birrane)