South Sudan to receive payment from Sudan for disputed crude
South Sudan will receive payment for oil it said Sudan illegally loaded onto two ships earlier
this year, according to the terms of an agreement signed yesterday between the two countries.
The accord requires Sudan to sell the cargo of crude on one tanker, the ETC Isis, and transfer the payment to South Sudan. Sudan must also direct funds being held by a London court from
another shipment to be released to South Sudan.
The shipments have been stuck in limbo after South Sudan threatened legal action against anyone trading or transporting the oil. One cargo remains on the ETC Isis, which has been anchored off Singapore since February, according to data provided by IHS Inc. Another tanker, the Ratna Shradha, was ordered in February to unload its crude in Japan by the London High Court of Justice, which has held the proceeds in escrow.
“Though the deal addresses oil still on board the ETC Isis and the funds held in London related to the Ratna Shradha, it does not address which party will be ultimately responsible for the demurrage charges and other fees incurred during the dispute,” said Dana Wilkins, who monitors oil in the two
countries for the natural resources watchdog group Global Witness in London.
“These substantial liabilities will likely be decided in private litigation or negotiations between the companies and the governments,” she said in an e-mailed response to questions.
Agreement
The two nations yesterday signed an agreement that will allow the resumption of oil exports halted amid a dispute over their border and oil-transit fees. South Sudan shut down its crude production in January after it rejected demands by Sudan it pay more to transport oil via Sudan to a loading terminal on the Red Sea.
The accord requires each country to “unconditionally and irrevocably cancel and forgive any claims of oil-related arrears,” excluding the Ratna Shradha and ETC Isis shipments. The deal doesn’t specifically mention the fate of two other shipments of Southern oil that were loaded by Sudan, according to letters from oil companies provided by Pagan Amum, South Sudan’s chief negotiator.
A tanker called the al-Nouf was loaded with 750,000 barrels of Dar Blend, while 650,000 barrels were loaded onto another vessel, the Sea Sky, the letters show.
According to an April 5 filing in the London High Court of Justice, 630,000 barrels of Nile Blend were offloaded from the Ratna Shradha and sold by Trafigura Beheer BV to JX Nippon Oil and Energy Co., Japan’s largest refiner. JX Nippon deposited its payment of almost 58 million euros ($75 million) with the court in March, the documents show.
Confiscated
Sudan’s loading of the four ships was among the reasons South Sudan halted oil production, accusing its northern neighbor of stealing $815 million worth of its crude. Sudan said it confiscated the oil to make up for unpaid fees.
South Sudan acquired three-quarters of the formerly united country’s oil reserves when it seceded in July last year. More than a year of negotiations failed to yield an agreement on how much the landlocked south should pay Sudan for the use of pipelines and processing facilities. The agreement signed yesterday stipulates that South Sudan will pay Sudan a transit fee of $1 per barrel and a $1.60 processing fee. The south will pay transportation fees of $8.40 to use one pipeline and $6.50 to use another.
The agreement also stipulates that each country will “undertake to maintain full mutual transparency of all information relevant to the petroleum activities” that affect the other country. Wilkins said the transparency clause does not go far enough.
“Nothing in the signed agreement guarantees Sudan or South Sudan’s citizens access to information on how much oil or money is changing hands under the transit deal,” she said. “Though a monitoring committee is set up to oversee the technical and financial operations, the public has no way to tell what the outcomes or how effective the committee will be. Even the independent audit is confidential.”
- Database Search
- Unpaid Debt A comprehensive overview of the role of the Lundin Consortium in the oil war. ECOS calls upon the Swedish, Austrian and Malaysian governments to investigate whether, as a matter of international law, Lundin, OMV and Petronas 'were complicit in the commission of war crimes and crimes against humanity by others during the period 1997-2003.’ In response, the Swedish Public Prosecutor for International crimes opened a criminal investigation into ‘links between Sweden and the reported crimes’.
- In Depth For more specific information about the Lundin court case please visit the Unpaid Debt dossier.
