Sudan South Sudan Oil Agreement

South Sudan`s oil minister, Puok Kang Chol, called the agreement a real step towards closer cooperation between the two countries. He said a Sudan coordination office would be set up in Juba. At the time of al-Bashir`s fall, Juba and Khartoum had agreed on a more or less constructive relationship. The agreement was extended last year under the transitional government until March 2022, indicating that both sides will continue to cooperate in the oil trade. However, the interim government in Khartoum presents a new dynamic for South Sudanese politicians and uncertain relations could lead to a situation where cooperation is no longer assured. Sudan has two main export pipelines that are heading north across the country to the Bashayer Naval Terminal, located about 25 miles south of Port Sudan. Most crude oil and refined product warehouses are also located at the Bashayer Naval Terminal. The Bashayer Naval Terminal has a 2.5 million.b/d warehouse and an export/import facility with a transload capacity of 1.2 million .b/d. The Greater Nile Petrole Operating Company (GNPOC) operates the terminal. At present, South Sudan does not have significant storage capacity. South Sudan exports all of its crude by pipeline to Sudan. Asymmetries of this magnitude potentially represent huge sums of money. If it were to be found that the oil figures published by the government of national unity, for example, would have been undervalued by 10%, the government of the South would be liable for more than $600 million (based on the fact that the government of South Sudan has received more than $6 billion in oil revenues since the signing of the peace agreement).

This is more than three times the South`s annual budget for health and education. « The agreement is a great step forward in strengthening cooperation between the two countries in the oil and gas sector through a spirit of brotherhood and cooperation in the interests of both countries, » he said. The Khartoum government publishes figures on its oil industry revenues, but neither the government of South Sudan nor Sudanese civil society have any way of verifying them. Khartoum is entirely responsible for the marketing and export of southern oil: it collects figures of the amount of oil produced and the price at which it was sold. The government of the South is not involved, although oil revenues account for 98% of their revenues. To the sounds of South Sudanese and Sudanese music, the interim government of Sudan signed a peace agreement in early October with various rebel groups operating on the outskirts of their vast and generally dry territory. Following the outbreak of fighting over oil facilities and a controversial country, the United Nations has threatened both sides with sanctions if they fail to reach a comprehensive agreement. Minister Abdelrahman said other concession agreements, which will amount to 20, will be signed next week.

For his part, Chuang welcomed the extension of the agreement and the commitment of the two countries to cooperation agreements in the field of oil cooperation. The economic life of South Sudan is linked to that of Sudan. Both nations are dependent on oil, but South Sudan holds most of the region`s 3.5 billion barrels of proven oil reserves, while Sudan has export pipelines, refineries and access to the sea. One is useless without the other. On the basis of this interdependence, the two nations signed an agreement in 2012 under which South Sudan would compensate Sudan for the loss of oil revenue and the destruction of pipeline infrastructure caused by the civil war. It had been announced that the two presidents would sign a comprehensive agreement on Wednesday morning, but that was not done. The agreement marked a step towards peace in Sudan itself and a reduction in hostilities between the two sovereign nations.