JUBA. South Sudan government says it will pay the pay $262 million demanded for transfer of oil through Sudan’s territory.
- “It was agreed that the government of South Sudan should pay off the outstanding arrears which were not paid,” South Sudan’s information minister, Michael Makuei Lueth was quoted saying.
He added, “We want to avoid renegotiating the existing oil deal.”
South Sudan got the lion’s share of the oil when it split from Sudan in July 2011 after a referendum, but it’s only export route is through Sudan, giving Khartoum leverage and leading to pricing disputes.
Since its independence, however, South Sudan has relied on oil for all income, a situation that has significantly compounded ongoing political and economic instability due to the fall in crude oil prices.
According to South Sudanese officials, production in the past reached 350,000 bpd but fell after a dispute with Sudan over fees for pumping South Sudan’s crude through Sudan’s export pipeline, leading to a halt in oil production in 2012.
Even after restarting its production, it never recovered to those levels, but it dropped to 245,000 barrels per day after the outbreak of the civil conflict in South Sudan in 2013, which hindered production in the oil-rich areas of the north.
South Sudan is obliged under the terms of the 2012 Cooperation Agreement 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 $3.028 billion 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 South Sudan’s secession in 2011.