South Sudan cuts oil output, sees new problems with Sudan
Tue May 21, 2013 4:07pm EDT
(Fixes slugging)
* Cuts in production bad news for both Sudans
* Neighbours agreed in March to resume crude exports
By Hereward Holland and Khalid Abdelaziz
JUBA/KHARTOUM, May 21 (Reuters) - South Sudan has almost halved its oil
production as it faces new "problems" exporting crude to Sudan, it said on
Tuesday, suspecting its long-time rival had closed a cross-border pipeline,
a move that would be a sign of friction.
Sudan's Oil Minister Awad al-Jaz denied crucial oil exports had been halted
but the Sudanese pound fell on the black market close to a record low as
traders worried an economic crisis would worsen.
The cut in oil production is bad news for both African countries which have
been suffering since South Sudan shut down its oil output of 350,000 barrels
a day in January 2012 over a row with Sudan over pipeline fees. Oil is the
lifeline for both.
The neighbours agreed in March to resume crude exports from landlocked South
Sudan through northern oil facilities and defuse the tension that has
plagued them since their messy divorce in 2011.
But mistrust remains deep between the neighbours who fought one of Africa's
longest civil wars until 2005 and again came close to armed conflict in
April 2012 over oil fees and disputed territory.
"There has been a problem with the oil production on the side of Sudan,"
Mawien Makol Arik, spokesman for South Sudan's foreign ministry said in the
capital Juba.
He said the charge d'affaires of <
http://www.reuters.com/places/china>
China, which controls South Sudan's oil industry, had told the Juba
government there was only a technical issue with the cross-border oil flows.
"But we suspect it is political. We suspect that Sudan has shut down the oil
pipeline," Arik said, adding that his government had cut the output to
105,000 barrels per day (bpd)from around 200,000 bpd previously.
"If it is closed down it will cause problems for us because we have no
storage facilities left," he said.
The Sudanese oil minister denied the two pipelines had been shut and said
oil from three southern fields had arrived so far.
"South Sudan's oil is flowing normally on Sudanese soil to the export
ports," Jaz told state news agency SUNA. "Work between Sudan and South Sudan
is continuing according to the joint cooperation plan signed between the two
countries."
The Sudanese pound fell to 6.9 against the dollar, down from 6.4 a week ago
- the official rate stands at around 4.4. Traders said they worried a dollar
shortage driving up inflation would worsen unless pipeline fees from South
Sudan arrived soon.
Like the South, Sudan needs dollars to pay for basic food items such as
wheat and sugar.
MORE DELAYS
Sudan said earlier this month it received the first oil from the south in
Heglig, the scene of heavy clashes in April 2012, from where it is sent to
Port Sudan to be exported.
South Sudan's President Salva Kiir was expected to travel to Port Sudan this
month to oversee the first loading of oil onto vessels but neither side has
confirmed a date for three weeks.
Khartoum later accused Juba of supporting rebels operating across their
shared border but Sudanese Foreign Minister Ali Ahmed Karti said during a
visit to Juba on Friday the issue would not affect the oil export deal.
The tightly controlled Sudanese press has written extensively about Juba's
alleged support for rebels who attacked a central Sudanese town in April.
South Sudan denies any support for Sudanese rebels and accuses Khartoum of
backing insurgents on its territory.
Oil sources have said restarting oil production in South Sudan would be a
technical challenge as oil wells were closed in a rush last year. Spare
parts are difficult to get into one the world's least developed countries
which has few good roads. (Additional reporting and writing by Ulf Laessing;
Editing by Michael Roddy)
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Received on Tue May 21 2013 - 21:53:57 EDT
