South Sudan Warns Oil Companies Over Illegal Deals With the North

South Sudan warned all foreign oil companies, the oil consortia and pipeline operators in the country not to coöperate with Sudan on crude oil-related matters, unless authorized.

The directive was contained in a press release issued by the South Sudan’s petroleum and mining ministry following reports of north Sudan’s apparent intention to confiscate 23% of the south’s entitlement oil allegedly as payment in kind for pipeline and transit fees.

“The government of South Sudan will not tolerate any public or private party operating in South Sudan or providing services to South Sudan to act in any way complicit in the theft of South Sudan’s oil,” partly reads the statement signed by Stephen Dhieu Dau, the petroleum and mining minister.

Describing Sudan’s intended move as an “illegal act”, Dau, urged the northern government to “refrain from any hostile act and reconsider its position regarding the $5.4bn package and not to deprive Sudanese citizens from the benefit this assistance provides”.

The Petroleum minister described as “blatantly false” allegations that South Sudan was not paying for the use of Sudan’s pipelines or other oil-related infrastructure, adding that these accusations are contrary to the established contractual and legal structures, including the principles of international law.

Meanwhile, the ministry also warned potential buyers of crude oil illegally obtained from South Sudan, saying the southern government will take legal actions against all parties involved in the said transaction.

On Wednesday, South Sudan government reacted angrily to reports that Sudan plans to take 23% of the new country’s oil exports, saying it will consider suspending oil production if north Sudan continues to impose high transportation and refinery costs.

Talks between the North and South collapsed once again on Wednesday after the African Union High Panel Implementation (AUHIP) failed to resolve differences between two the countries due to Northern belligerence.

The AUHIP proposed a compromise by which Khartoum gets a percentage of annual oil exports that would include the transit fees to help Sudan overcome the current economic crisis. In return for that Sudan would facilitate border trade and open ports for the flow of goods to South Sudan.

Sudan suggested that the south pay $10.5 billion during the next five years but Mbeki’s team and the International Monetary Fund (IMF) put the figure at $7.4 billion. Neither of the numbers was agreed on.

The head of Sudan’s delegation Sabir Mohamed al-Hassan accused the South of involving other issues at the oil negotiations such as Abyei and border demarcation.

Al-Hassan further said that they put oil treatment cost at $6 and after adding transit fees, the cost of transportation and port charges and after taking into account the changes in oil prices it would all add up to $36 per barrel

He revealed that South Sudan rejected the figures on the grounds that the oil pipeline was constructed using the south’s oil money.

“We did not move forward in the negotiations because of the lack of clarity of vision with the other side,” al-Hassan said.

After South Sudan’s independence in July, the only way to export oil has been through north Sudan. The new country has been pondering building a pipeline that runs through neighboring Kenya will but analysts say it will take years to build.