Trafigura and South Sudan agree oil export deal
Switzerland-based oil trader signs lucrative deal to export Dar Blend low-sulphur crude oil from republic.
The oil trader Trafigura has signed an export agreement with South Sudan, which is preparing to resume output after a gap of more than a year.
The deal is a coup for Trafigura, a dealer in Sudanese oil long before the nation split. Until late last year the firm was embroiled in a legal dispute over a cargo of oil that South Sudan claimed was stolen by its northern neighbour.
The Switzerland-based firm, which corporate filings show gets nearly 30% of its oil turnover from Africa, is the world's third-largest trader in raw materials.
Trading houses have jostled for access to South Sudan's low sulphur oil, which is sought by Asian buyers. The firms are seeking to expand their presence in Africa and extend distribution networks in a region where demand is booming.
Glencore was the first to secure an agreement to market South Sudan's oil, but the deal was scrapped after opposition from some South Sudan officials.
"(South Sudan) is such an interesting market because people see it as a blank canvas," said Gary Still, executive director of a UK-based oil consultancy focused on Africa. Details of the export volumes and the value of the deal between Trafigura and South Sudan were not immediately available.
"Under the agreement, signed on 7 March, Trafigura will purchase Dar Blend crude oil from the Republic of South Sudan," the company said. "The crude oil will be delivered to Port Sudan for export via pipeline."
A document from South Sudan's ministry of petroleum confirmed the agreement. It said production of Dar Blend was expected to start in the next few days.
Trafigura has previously made headlines over a $200m settlement with Ivory Coast over toxic waste dumping. The company has denied responsibility or any wrongdoing.
South Sudan, which relied on oil revenues for about 98% of income, pumped approximately 350,000 barrels a day before a row with Khartoum prompted it to shut production last year. The landlocked country must pump its oil to the Red Sea through a pipeline across its former civil war foe Sudan to Port Sudan to sell it on international markets.
Early last year, Juba accused the North of seizing more than $800m in oil revenues, which the government in Khartoum said provided compensation for unpaid transit fees.
One of the disputed cargoes was bought by Trafigura, which said at the time it had made "significant efforts" to confirm legal title of the oil.
The proceeds from the cargo, worth about €58m, were later seized by an English court to establish ownership.
A court document dated 7 November shows a settlement had been reached, although some of the details remained confidential. Trafigura declined to comment on the settlement.
It was not clear how oil revenues would be shared between Sudan and South Sudan as part of the new Trafigura agreement. Trade sources said they expected a large portion of the exports ultimately to be delivered to China, where some refineries are equipped to process South Sudan's crude.
Dar Blend and Nile Blend grades from South Sudan have previously been sold to a wide range of buyers, including Vitol and Arcadia trading houses as well as ChinaOil and Unipec.
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