South Sudan and Kenyan representatives sign Memorandum of Understanding for construction of oil pipeline to Lamu port [©ST]
By Lucas Barasa
JUBA, 25th January 2012 - Kenya and South Sudan have signed an agreement for the construction of an oil pipeline connecting the two countries.
The agreement, signed in Juba yesterday and witnessed by Kenya's Prime Minister Raila Odinga and the President of South Sudan H.E Salva Kiir, will allow the development of an oil pipeline and fibre optic connections between the oil fields in South Sudan and the Kenyan port town of Lamu.
The pipeline will be developed through Kenyan territory and will be built and owned by South Sudan. The two countries will negotiate and agree on transit fees for the oil pipeline.
Mr. Odinga led a team of government officials to Juba for the signing of the agreement. The Kenyan delegation included Foreign Affairs Minister Moses Wetangula, Energy Minister Kiraitu Murungi and Public Service Minister Dalmas Otieno. Mr Murungi signed on behalf of Kenya.
Mr. Stephen Dhieu, the Minister for Petroleum and Mines, signed on behalf of the Government of South Sudan.
The signing of the agreement between Kenya and South Sudan comes amid deepening row over oil pipeline pitting Sudan and South Sudan. Last week, South Sudan shut down its oil pipeline that runs through the Sudan to the export terminal along the Red Sea coast. The closure followed South Sudan’s persistent oil row with Sudan.
The Council of Ministers in a sitting chaired by President Salva directed the Petroleum and Mining Minister Stephen Dhieu Dau to execute the decision immediately, Information Minister Barnaba Marial Benjamin said.
South Sudan accuses her northern neighbour of stealing its oil destined to potential buyers overseas and constructing a secret pipeline to divert her oil. Over 75% of the crude oil Sudan exported before its split in July last year came from fields in the south, but most of the infrastructure has been in the north.
Even after independence, the two countries are yet to agree on a transit fee for the latter to use the pipeline that runs to the export terminal at Port Sudan along the Red Sea coast.
Tensions escalated last week when Khartoum said it had started confiscating oil from landlocked South Sudan, which exports its crude through Sudan’s pipelines to a port on the Red Sea.
Sudan’s economy has been badly hit by the loss of two-thirds of oil production to the South, and the country is under pressure to ease the hardships of people already exhausted by years of conflict, inflation and a U.S. trade embargo.
Despite South Sudan’s oil wealth with production of 470,000 barrels per day, it lacks the infrastructure to refine and export oil.
Crucial facilities including a pipeline and Red Sea export terminal remain in Sudan, leaving the two states arguing over how much the south should pay to use the infrastructure.
Sudanese authorities recently stopped two ships loaded with 650,000 barrels of South Sudanese oil from leaving the export terminal because they did not pay the port fees, according to Khartoum's foreign ministry.
Oil is vital to both economies -it accounts for almost all of South Sudan's government revenues, but the two countries have yet to agree how much South Sudan should pay as a transit fee.
Oil firms active in South Sudan include Chinese state-owned China National Oil Corp., or CNPC, and Sinopec, Malaysia's state-owned Petronas, and Oil and Natural Gas Corp of India, or ONGC.
Source: Nation Media