South Sudan: Govt Explores Pipeline Route Through Ethiopia and Djibouti

Juba — South Sudan on Thursday said it has started talks with the Djibouti government to build an alternative oil pipeline through Ethiopia and Djibouti; weeks after the cabinet of the new nation passed a resolution shutting down oil production over a transit fee dispute with north Sudan.

Juba accused neighbouring north Sudan of stealing it's oil, while Khartoum said it had taken the crude as payment in kind for $1 billion of unpaid fees.

South Sudan officially became an independent nation last July in line with the 2005 peace deal, which gave the region the right to self determination.

Since secession landlocked South Sudan had been unable to agree how much it should pay it northern neighbour to use it's infrastructure to refine and pump Nile crude to the Red Sea's Port Sudan enabling it to reach international markets.

Talks held under mediation of the African Union High Implementation Panel have failed to bring the sides together.

Khartoum demands 32.02 dollar per barrel but Juba is only willing to pay around $1 and says it would better allow the oil "remain underground" to benefit the next generation rather than to pay above normal international charges.

Marial Awuou Yol, South Sudan's deputy finance minister on Thursday said Juba was exploring all possible alternatives to construct an alternative route to the neighboring countries.

"We have already signed a memorandum of understanding with Ethiopia and Djibouti. We do not want to put all our eggs in one basket," Yol told reporters.

The official said the construction of the pipeline would be funded by a consortium of companies.

Analysts say the pipeline will take far longer than the 10 months estimated by the South Sudanese government and point out that unless more oil is discovered building a new pipeline is unlikely to be financially viable.

The landlocked new nation signed a similar deal with Kenya in January, days after the council shut down the oil production operation. A consortium of both national and international companies including Toyota group have already started a feasibility study into building a pipeline through Kenya.