South Sudanese government announced that it has reached an understanding with the government of neighbouring Sudan from which it seceded in 2011 to reduce charges for transporting crude oil to the international markets through Sudanese territory, Sudan Tribune reported.
Transit fees that Sudan charges South Sudan will be based on prevailing crude oil prices, a move away from a fixed fee, South Sudan’s petroleum minister said according to Reuters.
In recent weeks, local media have reported of a growing standoff between Sudan and South Sudan over oil transit fees, with the south wanting a cut as the collapse in global oil prices mean transit costs sometimes exceeded the price of crude.
The young nation is obliged under the terms of the 2012 deal to pay Sudan $9.10 per barrel for oil flowing using Petrodar facilities in Upper Nile in addition to a fee of $15 per barrel in fulfillment of a $3.028b package which the two sides agreed as transitional financial arrangement (TFA). The TFA is meant to help Sudan cover the gap resulting from the loss of revenues due to secession of South Sudan from Sudan in 2011.
But now the two oil ministers representing South Sudan and Sudan hinted a fixed $15 per barrel rate would be renegotiated and the amount of $3b will not be affected by the new arrangement.
Sudan lost most of its oil earnings when the south seceded in 2011 and is acutely short of revenue. South Sudan’s crude production stands at about 165,000 bpd.