South Sudan Govt in Talks With Texas Company On Oil Pipeline

South Sudan has fully shut down its oil wells

The government of South Sudan is in talks with a Texas-based company to explore options for building an oil pipeline which would serve as an alternative to the one passing through the territories of Sudan.

According to South Sudan information minister Barnaba Marial Benjamin, the unidentified company could start working the project in as soon as six months.

He offered no further details.

The official further said that South Sudan had signed a memorandum of understanding with Ethiopia to construct an oil pipeline passing through Djibouti.

A source close to the Juba government said that Ethiopia’s Prime Minister Meles Zenawi gave his approval to the idea. It is not clear if Djibouti did the same yet. Eritrea is also an option on the table even though its president Isaias Afewerki has yet to respond.

Last week, the former Sudan oil minister Lual Deng said that exporting the oil through Djibouti would be a shorter distance than using the established pipeline going all the way from South Sudan to the Red Sea.

South Sudan minister said that Toyota Company has started feasibility studies on the Lamu pipeline project which was signed recently with Kenya.

The landlocked nation is currently involved in an escalating dispute with Khartoum over the payment of transit fees for its oil.

Negotiations between Juba and Khartoum, hosted by the African Union High-level Implementation Panel (AUHIP) have thus far failed to find a resolution.

Khartoum demands South Sudan pays $32 per barrel of oil that passes through its territory. Juba says it will only pay around $1 a barrel.

As talks on the fees dragged on the Sudanese government said it ran out of patience and can no longer tolerate South Sudan exporting its oil for free. As such it started taking part of the oil pumped by South Sudan to make up for what it called unpaid fees.

In response, South Sudan said last month it was shutting down its output.