South Sudan, locked in a row over oil transit fees with neighbour Sudan, said on Wednesday it plans to build a temporary underwater oil pipeline along the Nile as part of a project to deliver crude for export from ports in Kenya and Djibouti.

The pipeline would extend from oilfields to the capital Juba where the crude would be transferred to trucks and taken on to Kenya and Djibouti, South Sudan’s Minister of Petroleum and Mining Stephen Dhieu Dau told Reuters by telephone.

Oil provides about 98 percent of South Sudan’s income and is vital to the impoverished country as it tries to develop infrastructure and institutions devastated by a war that killed an estimated 2 million people.

South Sudan seceded last July under a 2005 peace agreement that ended decades of civil war with Khartoum. But peace remains uneasy at best, with the north and south deadlocked over oil transit fees that have contributed to recent high global oil prices.

Some 30,000 barrels per day (bpd) of crude would be delivered to ports under the project, which could be completed by the end of the year, Dau said.

“The temporary pipeline will be established under the water of the Nile from Tharjath (oilfield) up to Juba,” he said.

The landlocked new nation took control of about three quarters of the unified country’s oil output of roughly 500,000 bpd, but it needs to export its crude through northern pipelines to the Red Sea port of Port Sudan.

The two nations separated without agreeing how much the south should pay to use oil facilities in the north.

ALTERNATIVES

South Sudan, now seeking alternative routes to export its oil, plans to truck crude from oil blocks seven and three in Upper Nile state through Ethiopia to port at Djibouti, Dau said.

The crude will flow through the plastic pipeline from Unity State to Juba, and be trucked the rest of the way via Uganda or straight through Kenya to the port of Mombasa, he added.

“We hope that within this year we will start to export. It depends on the preparation of the road and the availability of these facilities,” Dau said.

South Sudan has signed agreements to build new pipelines through Kenya and Ethiopia that they hope to complete within 18 months, although analysts doubt the economic viability of the schemes.

A Norwegian company approached the south for the temporary pipeline project but no deal has yet been signed, Dau said without providing further details.

South Sudan’s government in Juba shut down its 350,000 bpd oil production in January after the north seized more than $800 million of the south’s oil and built a tie-in pipeline to divert it through refineries in Khartoum.

The two countries last month signed a pact agreeing to “respect each other’s sovereignty and territorial integrity, non-interference in internal affairs, rejection of the use of force, equality and mutual benefit; and peaceful coexistence.”

Then last week South Sudan accused Sudan of bombing an oil well. Sudan denied responsibility. The two governments met in Ethiopia on Tuesday to try to break the deadlock over oil transit fees.

Source: Reuters