S. Sudan mulls oil pipeline through Ethiopia, Djibouti

JUBA (Reuters) - South Sudan is considering building an oil pipeline through Ethiopia and Djibouti, officials said on Thursday, weeks after the new country shut down crude production in a row over export transit fees with Sudan.

South Sudan seceded from Sudan last year, but the two countries have been unable to agree how much the Juba government should pay to transport its oil output of about 350,000 barrels per day through Sudan to a Red Sea port.

As talks floundered in December, Khartoum began taking a portion of southern oil to make up for what it calls unpaid fees. Juba responded by halting oil production last month and has started looking for alternative routes to export its crude.

At the moment, the only pipelines taking southern oil to market pass through Sudan. Analysts fear the dispute could spark conflict between the two countries, both of whose economies depend on oil.

South Sudan signed a memorandum of understanding with Ethiopia and Djibouti around trade last week which included the possibility of building an oil pipeline, Deputy Minister of Information and Broadcasting Atem Yaak Atem said.

"As a landlocked country, we would like to have an outlet to the sea for our goods to go to the outside world and for our imports to come in," he said.

South Sudan's deputy finance minister Marial Awou Yol confirmed the country was considering the oil pipeline through Ethiopia.

"We do not want to put all our eggs in one basket," he said. "It should be financed by a consortium of companies. The more companies we have, the faster it can be done."

South Sudan signed a similar deal with Kenya in January.

South Sudan previously said an arm of the Toyota group had started a feasibility study into pipeline through Kenya, although some analysts say the pipeline is not economically viable unless significantly more crude reserves are discovered.

South Sudan declared independence in July under a 2005 peace deal that ended decades of civil war with the north. About 2 million people died in the conflict, fought over ideology, religion, ethnicity and oil.