Sudan, South Sudan to adjust pipeline fees

The Sudanese and South Sudanese Ministers of Oil have agreed to reduce the monthly fee South Sudan is pays for oil exported through Sudanese territory ‘for the time being’.

The Oil Ministers of the two countries met in Juba on Wednesday after falling oil prices threatened to reduce South Sudan’s earnings on its oil production to a loss. The fixed rate South Sudan pays to Sudan has remained unchanged since the signing of a Cooperation Agreement in September 2012, Radio Tamazuj reported yesterday.

Most of South Sudan’s revenues come from oil earnings. The falling global crude oil price has therefore threatened to cripple the country, bringing spending on civil service salaries and security to a standstill unless loans could be obtained.

Under the terms of the 2012 deal, South Sudan pays $9.10 a barrel for oil flowing through Petrodar facilities in Upper Nile State, plus a fee of $15 a barrel to fulfil a $3,028 billion obligation called the “Transitional Financial Arrangement” (TFA).

The Oil Ministers indicated in a press conference in Juba on Wednesday that the $15 a barrel rate would be renegotiated, though the total TFA amount of $3 billion would not change but would merely be paid over a longer period of time.

“When we negotiate on the TFA in particular, it will not be a fixed $15 a barrel as it was agreed in 2012. It will be fluctuating up and down depending on the prices of the crude globally. This is the principle that we agreed. But how much, that we will leave to the technical,” the South Sudanese Minister of Petroleum and Mining, Stephen Dhieu Dau, said.

Sudan’s Minister of Petroleum and Gas, Mohamed Zayed Awad, stressed the mutual benefit to the two sisterly countries. “For this issue to be scientific, we gave it to the technical people… Yes, we have agreed in principle but we need the technical people to work on it and in a week to come we will reach to the conclusion,” he said.

Awad confirmed that in principle they agreed to reduce the monthly payments for the TFA, extending the allowable period for payment of the $3 billion sum.

The September 2012 agreement will be extended to accommodate this change, since the deal had been scheduled to end in 2016, according to the South Sudanese Minister.