Tall tight-lipped men, in suits of elegant cut, filled the lobby of the Sheraton Hotel in the Ethiopian capital as Sudan and South Sudan resumed talks to hammer out an agreement to becalm their troubled borders and resume the production and export of oil.
Last year, after decades of civil war, South Sudan held a referendum and broke away from its northern neighbour. The division left land-locked South Sudan with most of the region’s oil reserves; while Sudan retained the pipelines, most of the refineries, and Port Sudan — where oil is loaded onto tankers and shipped across the world. Analysts estimate that the two countries have between 4.2 billion and 6.7 billon barrels — a fraction of the estimated global reserve of 1,653 billion barrels.
ONGC Videsh (OVL) — a subsidiary of Oil and Natural Gas Corporation Ltd, the China National Petroleum Corporation and Petronas of Malaysia, are the primary players in South Sudan’s oil sector. OVL has also financed and constructed a 741 km pipeline from the Khartoum refinery in Sudan to Port Sudan on the Red Sea.
India imports about 4 per cent of the oil exported by the two countries while China accounts for about 66 per cent, according to a brief published by the Energy Information Administration, the statistical agency of the U.S. government.
In January this year, South Sudan unilaterally stopped oil production after a dispute over the transit fee demanded by the North for use of its pipelines. The stalemate has affected both countries; the International Monetary Fund estimates that oil accounts for about 90 per cent of Sudan’s exports and 98 per cent of South Sudan’s state revenues.
In August this year, the two countries arrived at an agreement on oil transit fees pursuant to a broader agreement on border security along a 10 km wide demilitarised zone.
“We will start with borders and then continue with the remaining issues,” said Deng Alor, South Sudan’s Minister for Cabinet Affairs, who is leading his country’s delegation. Mr. Alor said he expected an agreement by September 22, in time for the deadline set by the U.N. Security Council. “There are two figures [on oil]: Eleven dollars per barrel for the western pipeline and $9.1 for the eastern pipeline,” he said, adding that the figures could change, but were part of the suggested draft agreement.
The two sides are also negotiating the fate of Abyei, an oil-rich province controlled by the North, but claimed by the South. A referendum on Abyei has been postponed indefinitely as both sides disagree over who should be allowed to participate in the referendum, said a South Sudanese official.
