A South Sudan official said the country had shut down more than 900 oil wells after accusing neighbouring Sudan of stealing its oil.
Pagan Amum, secretary-general of South Sudan's ruling party, said the shutdown would have a big impact on the new nation, which relies heavily on oil revenues. But he said he'd rather see the country's oil sit in the ground than lose it to Sudan. “That is even worse,” he said.
South Sudan and Kenya signed a memorandum of understanding to build a pipeline from South Sudan's oil fields south to Lamu, on the northern Kenyan coast, where a new port is planned.
South Sudan's Oil Minister Stephen Dhieu Dau said planning for the project would now begin as soon as possible.
“We do not know exactly when, but the pipeline is a priority for the government,” he said. The agreement, signed by Kenyan Prime Minister Raila Odinga and South Sudan President Salva Kiir in Juba, comes as bitter negotiations between Sudan and South Sudan flounder.
At the centre of the talks are pipeline fees being charged by Khartoum. All of South Sudan's oil runs through Sudan's pipelines to Port Sudan for export. Khartoum has asked for $32 per barrel of oil shipped through the pipes, but South Sudan has called the offer extortion.
South Sudan has offered $1 per barrel, an offer which Information Minister Benjamin Barnaba Marial said was “the highest in the world”.
Mr. Dau said Kenya had agreed to set fees “based on the best state practices”. He said a planning committee would be immediately formed to work out the financing for the pipeline as well as the “environmental issues and social issues” surrounding its construction.
Landlocked South Sudan on Sunday started to halt oil production after accusing Sudan of stealing $815 million worth of the oil. S. Sudan broke away from Sudan last July . But the two new neighbours never agreed on the transit fees that South Sudan should pay Khartoum.
