South-Sudan pipeline: Circumventing Susceptibility BY: Charles Anteros, SOUTH SUDAN FEB. 17/2012, SSN; As we all know, South Sudan has taken a bold decision to stop the flow of oil through Sudan in response to Sudan’s belligerent and unilateral decision to confiscate several oil shipments that go through the only existing pipeline in the Sudan out of the landlocked South Sudan, and as ongoing negotiations on a possible transit fee for South Sudan's oil have been inconclusive.
Consequently, South Sudan has halted oil production while at the same time it has sought alternative routes, through Kenya, Djibouti and Ethiopia to construct pipelines to their sea ports. Reactions have soared from many non-South Sudanese even right after South Sudan seceded, dispiriting the latter from considering re-routing its oil. One prominent pundit on the issue is Luke Patey, who argued that, ”economically, the best scenario for South Sudan's oil is undoubtedly to stop pipe-dreaming, work out an agreement with Sudan, and continue to send its oil north.’ For him, as he agrees with other pundits, “Investing in a new multi-billion dollar southern pipeline is, in the current climate a financial insanity.” To convince us therefore, Patey says, the South will incur a colossal financial burden because of two major concerns. One, the technical and the other the security risks associated with maintaining the pipe line between South Sudan and Kenya. Failing to factor in other paradigms that could have strongly favored the proposed pipeline, Patey compared the proposed pipeline to the current existing pipeline that belongs to Sudan as a “pipe-dream chiefly for two reasons: The proposed alternative pipeline through Lamu according to him “would be around 1,800 kilometers ….and the topography of the routes differ vastly.” “The existing pipeline runs across quite a flat landscape, requiring only six pumping and heating stations to keep the highly-acidic crude flowing, the new pipeline would cover diverse terrain, possibly including the highlands of northern Kenya. This will require significantly more investment in pumping stations to speed crude up the inclines and slow it down on the declines.” As we find out, the speculations surrounding South Sudan’s precarious clamor for Sudan’s transit route are flawed for a number of reasons. 1). The guesstimate does not match other appraisals. As per the Kenyan and South Sudanese consultants who undertook the preliminary design, they had a 1,260 kilometer- long, 48 inch diameter pipeline, conveying 500,000 barrels per day of light (for example Nile Blend) crude oil. 2). By twist of fate, the power requirements for the crude pipeline project could be tapped from the newly negotiated electricity inter–connection from the Ethiopian hydro generation plants which was signed between Kenya and Ethiopia. Besides, the pipeline route through Kenya would pass through equally empty semi-arid areas without much right-of-way obstacles, and, yes, security has to be enhanced and guaranteed. 3). As per the cost associated to these projects, by and large, South Sudan stands at the best cost effective position than maintaining to use Sudan’s pipeline, an international standard given. Oil transit fees costs less than a dollar compared to the $ 36 per barrel. That means, South Sudan would have saved over $3b dollars yearly in its revenue. Moreover, the transit fees required by Sudan, is the total projected revenue forecast by the Sudan government as per its revenue lost after the South seceded from Sudan. Logically therefore, for South Sudan to accept the proposition, it would be a nincompoop decision. Oil Remains a Factor for Conflict After the discovery of oil in Sudan in the 1980s, bad politics, domination and war intensified in the country, pushing further the South Sudanese to seek secession. As the South Sudanese aspiration materialized after 22yrs, the penchant to return to war remains as both Sudan and South Sudan use South Sudan’s oil as source of revenue and conflict. Sudan remains reluctant to a feasible agreement and has further threatened through its proxy, rebels of South Sudan, to sabotage the development of other possible routes. In less than two weeks alone, the Sudan government has again usurped another 2.5 million barrels of South Sudan’s oil. Thus, the climate for dialogue has been exasperated further by Sudan’s reclusive but bamboozling posturing, giving no chance for a potential economic collaboration and achievement that should ameliorate the military and political discourse between the two countries seems to be declining. Moreover, South Sudan has offered without reservation a handsome $4 billion to cover Sudan loss in revenue as a result of South Sudan’s secession Whilst it is clear that pipelines are necessary to fulfill the operation of oil production in a landlocked country as South Sudan, the essential concerns such as the location and direction of routes have now become its major strategic problem. >From 2007 to 2011, Global Witness reported that the Sudanese government and the China National Petroleum Corporation, which is the biggest operator in the region, did not adequately account for discrepancies in published production figures. Figures given meant, South Sudan had a shortfall of 600 million dollars a year. It is worth noting that the explicably complex nature of relationship between Sudan and South Sudan is itself a liability for South Sudan’s oil. Right after its independence, Sudan and South Sudan have been at odds and their political contentions do seem to be relentless. Unlike Sudan conversely, South Sudan has close ties with Kenya and Ethiopia and that could significantly play in its favor. Meanwhile, the three prong approach on pipelines gives South Sudan more leverage to secure trust of consumer nations that need South Sudan’s oil and from investors that need stability of oil flow. Understandably, the reasoning behind Sudan government’s excuse in remaining obstinate and adamant in negotiating a cogent transit fees as well as coercing South Sudan to admit to the unreasonable levies, seems to arise obviously from its heavily indebtedness, the costly wars in Darfur, Blue-Nile and Nuba-Mountains and Sudan’s reduced revenues as a result of South Sudan’s secession. Had the situation been the reverse, with South Sudan heavily dependent on Sudan’s revenue or resources for that matter, this ordeal could have been considered futile for South Sudan. Consequently, even if Sudan prides over a discovery and exploration of gold, the senseless seizure of 5 million barrels of South Sudan’s oil gives support to the overwhelming inference that Sudan desperately seeks money. For Sudan’s actions alone contradict the vanities over the presence of other resources it now claims to have discovered. Equally important is for speculators not to concede that South Sudan and Sudan must come into an agreement on oil sharing deal as if the two countries were conjoint twins, inseparable and symbiotic. Assuredly, Sudan is not an indispensable transit and cheapest route. South Sudan is blessedly surrounded by neighbors who have been hosts to millions of South Sudanese during the civil war and so is the synergy between South Sudan and its neighbors to the South, East and West. Moreover, besides the oil, some geophysicists believe South Sudan is virtually sitting on unfathomable and incalculable amount of wealth. The oil spans virtually into all of South Sudan’s territory. Sudan’s leverage on the current impasse and other outstanding issues is therefore attenuated because South Sudan could aggressively tap into exploring other minerals like gold and diamonds and have them shipped via other means and routes that do not require pipeline. If South Sudan therefore requires circumventing its susceptibility, it must kiss Khartoum a happy Valentine goodbye. COMMENTS, PLEASE CLICK HERE Disclaimer: The views expressed above are solely those of the author(s) and do not represent those of the website. -------------------------------------------------------------------------------- -- You received this message because you are subscribed to the Google Groups "South Sudan Info - The Kob" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/SouthSudanKob?hl=en.
