South Sudan seeks to revise oil deal with Sudan

Due to the deteriorating economic conditions caused by the civil war and lack of political stability, South Sudan is seeking to revise the oil deal signed with Sudan, namely with regard to oil transit fees.

Behind closed doors, talks are going on between Khartoum and Juba which sees the necessity of reducing the transit fees of its oil exports through the Sudanese territories which was set at 20 U.S. dollars per barrel after the global oil prices have dropped by over 50 percent.

According to sources in both countries, South Sudan is planning to send its Foreign Minister Barnaba Benjamin to Khartoum in the coming two days to persuade the Sudanese government to reduce the South's oil transit fees through Sudan's oil facilities.

Juba seems to have found itself forced to cut on its financial expenditure under the declining global oil prices and dropping of the South's oil production to about 160,000 barrels a day due to the ongoing civil war in the new-born state since 2013.

"When the oil compensations agreement between the two countries was signed, nobody expected the global oil prices to drop to less than 50 dollars per barrel," South Sudanese local media on Sunday quoted Oil Minister Stephen Dhieu as saying.

"When we pay the oil fees in addition to the assistance provided for Sudan, what remains for South Sudan's treasury would be very little. This situation must be revised, and we are exerting efforts with Khartoum in this regard," he added.

Khartoum, meanwhile, seems to be open to reach a settlement with Juba as the continuation of the flow of the South's oil through the Sudanese oil facilities constitutes a vital matter for Sudan.

"It is of the interest of the two countries to reach a middle solution to ensure the continuation of South Sudan's oil production and its exportation through the Sudanese territories," Khartoum's Al Ray Al Am daily quoted Ishaq Bashir, former Sudanese state minister for oil, as saying on Sunday.

"I suggest for the two countries to reach a deal comprising a specific ceiling for the oil transit fees that balances between the production and global prices. The two sides must work to increase the oil production in South Sudan and increase in turn Sudan's revenues from the oil transit fees," he noted.

The oil deal, signed between Sudan and South Sudan in September 2012, stipulates that Juba would pay three billion dollars as assistance to Sudan in a period of three years besides that South Sudan's government would pay about 20 dollars as oil transit fees per barrel.

Before the signing of the agreement Sudan suggested allotting a portion of South Sudan's oil as transit fees instead of specifying a figure, but South Sudan then dismissed the proposal and insisted on determining a figure.

"Juba is now trying to return to the Sudanese proposal which it previously rejected," Abdul-Azeem Haraka, a Sudanese political analyst, told Xinhua on Sunday.

"It is apparent that there are many factors pushing Juba government to revise the oil deal including that South Sudan's oil production has reduced since the eruption of the civil war besides the fact that the global oil prices have dropped to unprecedented levels," he noted.

He went on saying that "though the matter seems difficult, but I expect the two countries to overcome this crisis for their common interest to ensure continuation of South Sudan's oil production and its exportation through the Sudanese oil facilities."

South Sudan plunged into violence in December 2013, when fighting erupted between troops loyal to President Salva Kiir Mayardit and defectors led by his former deputy Riek Machar.

The conflict soon turned into an all-out war, with the violence taking on an ethnic dimension that pitted the president's Dinka tribe against Machar's Nuer ethnic group.

The clashes have left thousands of South Sudanese dead and forced around 1.9 million people to flee their homes.