South Sudan has ordered the shutdown of oil production that provides about 98 percent of its revenue, amid a deepening row with Sudan over pipeline fees, the government said on Friday.
“The government has instructed the [South Sudanese] minister of petroleum and mining to proceed with arrangements for a complete shutdown of oil production,” South Sudanese Minister of Information Barnaba Marial Benjamin said.
Khartoum admits to taking some of South Sudan’s oil, destined for export, as compensation until an agreement is reached, but the South has said that is theft.
“The Council of Ministers decided today that in light of the present quantities of oil being taken by Khartoum” it would halt production, Benjamin added.
In Khartoum, the Sudanese Ministry of Foreign Affairs reacted by saying its neighbor had the right “to do what they want with their oil,” but South Sudan would suffer more than the north from a disruption of the oil flow.
The South split from Sudan in July, taking with it 75 percent of the country’s oil production of 470,000 barrels per day, but despite its oil wealth, the new state of South Sudan lacks the infrastructure to refine and export oil.
Crucial facilities including the 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.
The former civil war enemies — now regional neighbors — have exchanged repeated tit-for-tat accusations in a bitter spat during dragging negotiations over the sharing of oil revenues, raising tensions between the two sides.
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.
However, Benjamin said shutting down production would not be immediate, and that South Sudanese President Salva Kiir would meet Sudanese President Omar al-Bashir before it was stopped.
“It [production] is not just closed like a door key ... it cannot be less than seven days,” he said. “The council has also agreed that President Kiir will meet Omar al-Bashir at the African Union in Addis Ababa on Jan. 27.”
Oil companies in South Sudan include Nile Petroleum Corporation, wholly owned by the government of South Sudan, and Petrodar Operating Company, which is owned mainly by China National Petroleum Corporation, Petronas of Malaysia, Sudapet of Sudan and SINOPEC of China.
China, which relies on South Sudan for about 5 percent of its oil and is also a key ally of the Khartoum government, is supporting negotiations between the two sides in the Ethiopian capital.
In November Sudanese officials announced the country would take 23 percent of the South’s vital oil exports as payment in kind.
Juba has also claimed Khartoum is also trying to siphon off its crude and divert petroleum from the pipeline.
“If Khartoum is continuing to do that, there is no other option for the South,” Benjamin added.
Juba has threatened to sue companies that buy oil from Khartoum, as it claims the oil does not belong to the north.