Sudan Postpones South Sudan Oil-Pipeline Shutdown for Two Weeks

Sudan postponed a planned shutdown of South Sudanese oil exports to allow an African Union probe of claims that the south is backing rebels in its territory, Information Minister Ahmed Bilal Osman said.

The shift in the deadline to Aug. 22 from Aug. 7 will also enable South Sudan’s new government to show whether it plans to address Sudan’s demands that it stop supporting the renegade groups, Osman said in a phone interview today. South Sudanese President Salva Kiir on July 23 fired his Vice President and dismissed his entire cabinet.

“Since now there is the new government in the south, maybe there is the intention of Salva Kiir, the president, that there is renewed determination of stopping the forces of the rebels and to implement all the agreements which have been signed,” Osman said from the capital, Khartoum.

Sudanese President Umar al-Bashir said June 8 his government would halt South Sudanese crude exports in 60 days unless the south withdrew support for rebels opposed to his rule. South Sudan denies its backing the renegade groups and has accused Sudan of deploying troops in its oil-producing Upper Nile region. The landlocked country exports all of its crude via a pipeline through Sudan to Port Sudan on the Red Sea.

South Sudan has reduced oil output ahead of the deadline, with production currently estimated at 75,000 barrels per day, government Secretary-General Abdon Agau Jongkuch told reporters today in the capital, Juba. The country was pumping about 200,000 barrels last week, the Foreign Ministry said yesterday.

‘Nothing Changes’

Sudan’s postponement of the planned shutdown, “in terms of changing steps already put underway, it’s not going to change anything,” Jongkuch said. “An extension of two weeks will not add anything much in terms of oil exports.”

South Sudan’s declining supply is contributing to tightness in the global oil market as it coincides with the maintenance season at North Sea oil fields and compounds disruptions from Libya, according to Soozhana Choi, an analyst at Deutsche Bank. Front-month Brent crude, a benchmark for more than half the world’s traded oil, has gained 3.9 percent this month and was trading at $107.03 a barrel at 2:57 p.m in London.

“From our side actually there is good determination and good wishes,” Osman said. “There is no problem, actually, to postpone the shutdown of the oil.”

The African Union on July 23 asked for a six-week period to complete a probe into the claims of the former adversaries and urged the Sudanese government in Khartoum to back down from a threat to close the 1,600-kilometer (994-mile) pipeline.

South Sudan seceded from Sudan in July 2011 and took three-quarters of the formerly united country’s output of 490,000 barrels a day, producing about 350,000 barrels daily. Its crude is pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd., known also as Petronas, and India’s Oil & Natural Gas Corp. (ONGC)

To contact the reporters on this story: Michael Gunn in Cairo at mgunn14@bloomberg.net; Mading Ngor in Juba at mngor@bloomberg.net

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net

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