South Sudan signs oil pipeline deal to Djibouti via Ethiopia

(Feb 09, 2012,Yahoo! US)--South Sudan has signed an agreement to build an oil pipeline to the port of Djibouti via neighbouring Ethiopia, officials said Thursday, after Juba shut down its only export route via former foe Sudan. "We signed an agreement for another pipeline to go through Ethiopia and on to Djibouti," South Sudan's Minister for Information Barnaba Marial Benjamin told AFP.

Officials signed a memorandum of understanding during talks in the Ethiopian capital Addis Ababa earlier this month, and Chinese, American and European companies had shown interest in carrying out feasibility studies for building it, he said. "The pipeline will be owned by the government of South Sudan," Benjamin added.

However, industry experts have said that building a pipeline could take three years or more and be extremely costly. They have already criticised a separate deal last month to build a pipeline to the Kenyan coast. Djibouti, on the Gulf of Aden at entrance to the Red Sea, lies at least a thousand kilometres from South Sudan's oil fields, and crosses remote areas rife with rebel forces.

But a pipeline would free land-locked South Sudan on its dependence of exporting oil through its northern neighbour and former civil war enemy Sudan, from which it split last July after decades of bloody conflict. The oil-rich but grossly underdeveloped South lacks the infrastructure to refine and export oil. Sudan has retained crucial facilities including a pipeline and Red Sea export terminal, leaving the two states arguing bitterly over how much the South should pay to use the infrastructure.

Juba shut down oil production last month despite it making up 98 percent of its revenue, amid a deepening row with Khartoum over pipeline fees. It accuses Khartoum of stealing $815 million worth of its crude and building a pipeline to illegally siphon off oil.

The agreement last month with Kenya set out plans to build a pipeline to the coast at Lamu, where a new deep water port is planned. Fresh talks between Juba and Khartoum over the oil crisis are slated to begin Friday in Addis Ababa.

Source: Yahoo! US 

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