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      • Southern Sudan pledges to develop oil, cooperate with North

Southern Sudan pledges to develop oil, cooperate with North

Southern Sudan is preparing plans to develop its oil industry that don’t include revoking contracts signed by Sudan’s government if it votes to secede in a Jan. 9

referendum, the region’s minister of energy said.

“Most of the oilfields lie in the south; the infrastructure lies in the north,” Garang Diing Akuong, Southern Sudan’s minister for energy and mining, told reporters yesterday in Juba, the region’s capital. “We need cooperation between the north and the south so that the oil flows.”

The former rebels of the Sudan People’s Liberation Movement, who now govern Southern Sudan, are planning to build three oil refineries, pursue talks on constructing a pipeline to the Kenyan coast and review existing oil contracts, he said.

The government wants to ensure the contracts guarantee sound environmental and community practices, he said. Southern Sudan has asked Norway to sponsor an audit on damage to the oil

blocks, such as population displacement and spoiled water tables, Akuong said.

The audit “will be pinpointing somebody who will shoulder the liabilities,” either oil companies or Sudan’s government in Khartoum, he said. The main foreign companies involved in Sudan’s oil industry are China National Petroleum Corp., India’s Oil & Natural Gas Corp., and Malaysia’s Petroliam Nasional Bhd.

Sudan is sub-Saharan Africa’s third-largest producer of oil, according to the BP Statistical Review of World Energy, and about 80 percent of its output of 490,000 barrels of crude a day is pumped in Southern Sudan. The referendum is a key part of a 2005 peace agreement that ended a 21-year civil war between the north and south in which 2 million people died.

Refinery Plans

Sudan’s only oil refineries are in the north, with the largest, Khartoum Refinery, processing as much as 100,000 barrels of oil a day. All of Sudan’s crude exports pass through a pipeline running north to Port Sudan on the Red Sea.

In May, Akon Refinery Co., a joint venture of Khartoum- based Eyat Oilfield Co. and Southern Sudan’s state-owned Nile Petroleum Corp., announced a tender for bids to build a 50,000- barrel per day refinery. The project is estimated to cost $1.8 billion, according to the company’s website.

The authorities in Juba are also in talks with Toyota East Africa to construct a new oil pipeline to Kenya’s Lamu port. The pipeline would take three to four years to complete, he said. “There are potentials for big discoveries,” Akuong said, pointing to the 118,000 square-kilometer (45,560 square-mile) Block B concession in which Total SA has operating rights. Exploration hasn’t started.

Split Revenue

The government will also grant Nile Petroleum a stake in every oil block, said managing director Mangok Aleu. Currently the state-owned company only has partial ownership in three non-

producing concessions.

Under the peace agreement, the northern and southern regions split revenue from oil pumped in the south until July 2011. Southern Sudan depends on oil proceeds for 98 percent of its budget.

The two sides are negotiating on proposals to share oil- export revenue or charge pipeline-usage fees following the referendum to ease the impact of loss of control of the oil fields on the northern economy. No agreement has been reached. “It is not in the interest of the south to see the economy

of the north collapse,” Akuong said.

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