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South Sudan Defends Transfer of Sudan’s Oil Company Shares

South Sudan defended its decision to take control of the shares held by Sudan’s state-owned petroleum company in southern oil fields, calling it a “legitimate act of sovereignty.”

By a presidential decree on Nov. 8, South Sudan assumed ownership of the stakes held by Sudan’s Sudapet in joint operations with companies such as China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd and India’s Oil & Natural Gas Corp. The Sudanese authorities called the move an “arbitrary decision.”

African Union-sponsored negotiations due to start today between the countries over issues including the oil fees the south should pay to ship crude through the north and the disputed region of Abyei were postponed and may take place later this week, Eric Abibo Ngandu, an AU spokesman, said by phone from Addis Ababa, the Ethiopian capital.

South Sudan is negotiating new agreements with oil companies operating in the south that should be completed this year, the Ministry of Petroleum and Mining said today in a statement released in Juba, the capital. South Sudan will have sold 33.4 million barrels of oil from July 9 to Dec. 31 for $3.2 billion, according to the ministry statement.

South Sudan assumed control of Sudan’s previous daily production of 490,000 barrels of oil when it gained independence on July 9. South Sudan’s oil ministry said that the two governments agreed during pre-secession negotiations that the shares would be transferred to southern ownership along with the oil fields upon independence.

Revenue Payment

The oil ministry also said it expects Sudan to repay revenues it claims Sudan withheld illegally between January this year and July 8. A peace deal that ended a two-decade civil war required the north and south to split oil revenue equally prior to the south’s independence.

South Sudan warned foreign companies and potential buyers against purchasing oil from the south without its approval.

“All are on notice that if they purchased any South Sudan crude oil that has been expropriated or otherwise placed on the market without South Sudan’s consent, they will be held accountable and their future relationship with South Sudan shall be jeopardized,” according to the statement.

Refinery Plans

The ministry announced plans to purchase a “micro refinery” that would allow it to refine as much as 25,000 barrels a day and reduce imports from countries such as Kenya and Uganda.

South Sudan is studying the feasibility of building a larger refinery, as well as constructing a new pipeline to export oil through its East African neighbors rather than using Sudan’s pipeline that runs to Port Sudan on the Red Sea, according to the statement.

“Within the next few weeks South Sudan will send officials to neighboring contries that have proposed cross-border pipeline arrangements,” the ministry said.

Southern officials have said previously they are considering building a pipeline that would carry crude to the Kenyan port of Lamu.

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