North Sudan Releases South-Sudan’s Oil Shipment

Sudan released a 600,000-barrel oil shipment on Saturday, which it ceased from South Sudan over failed customs duty on Friday. Khartoum said it had stopped the crude cargo at the outlet of Port Sudan because South Sudan failed to pay customs duty. Tensions between Sudan and South-Sudan have led to arguments over how to divide oil revenues.

After its independence on July 9, South-Sudan took most of the country’s oil production of 500,000 barrels of oil as part of a 2005 peace deal that ended decades of civil war with Sudan. However, the South needs northern refineries, the only Red Sea port in Port Sudan and pipeline to sell the oil. So far, both sides have failed to agree on usage fees, and this could disrupt supplies from one of Africa’s largest producers.

“Now the shipment has left, the 600,000 barrels,” said David Loro Gubek, undersecretary at the southern ministry of energy and mining in Juba.
He confirmed that Khartoum had demanded a fee for future use of northern oil facilities of around $32 a barrel.

South Sudan had rejected the $32 per barrel proposal and asked the African Union (AU), which is sponsoring bilateral talks in Ethiopia, to find a compromise. Gubek said. “The African Union has not decided what is the correct amount to pay. Now I think our president talked to Omar Al-Bashir (Sudan’s President), so that whatever decision the AU gives, then the Republic of South-Sudan will pay.’

Tensions had seemed to have eased at the end of last month when South-Sudan said it saw progress in oil sharing talks with the North only a week after accusing it of waging economic war by demanding a very high pipeline transit fee. Last month, the northern parliament approved an alternative 2011 budget that lawmakers said included an annual income of $2.6 billion for transit fees – the same amount expected for the loss of southern oil production.

Sudanese oil flows mainly to Asia, with China buying more than half of total volumes. South-Sudan’s production is dominated by Chinese and Indian companies, which have been marketing their crude themselves so far. Last month, South Sudan also signed a deal with trading house Glencore to help it market crude, but a dispute between various officials has threatened to derail the agreement.

Refineries are located only in the North. Experts say South-Sudan plans to connect to a pipeline in neighboring Kenya, but that may take some years.

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