Juba fuels Sudan oil row with Kenya pipeline deal

Kenya and South Sudan have signed an agreement to build an oil pipeline connecting the two countries as Juba looks for an alternative transport route for its top export in the face of a falling out with Khartoum over revenue sharing.

A statement from the Prime Minister’s office said Energy minister Kiraitu Murungi signed the deal on Wednesday with Sudan’s Petroleum and Mines minister Stephen Dhieu allowing for the construction of an oil pipeline and fibre optic connections between the oil fields in South Sudan and the Kenyan port town of Lamu.

“The pipeline will be developed through Kenyan territory and will be built and owned by South Sudan,” the brief statement released by Mr Raila Odinga’s office said.

It added that South Sudan president Salva Kiir and Mr Odinga witnessed the accord which comes just weeks before the planned ground breaking ceremony for the Lamu port project next month by President Kibaki.

The decision to build a pipeline signals South Sudan’s intention to establish separate links after a protracted separation from the north which ended with the establishment of South Sudan as an independent nation last year.

Tensions between the two countries have since revolved around what fees Sudan should charge Juba for transporting oil to Port Sudan and more recently, how the revenue from the oil should be shared.

On Monday, Mr Kiir accused Sudan of seizing crude oil worth $815 million over the revenue sharing dispute.

The two countries have failed to reach an agreement over a transit fee for getting the oil to Port Sudan through a pipeline running north through Sudan.

Mr Kiir also accused Sudan of building a tie-in pipeline to divert 120,000 barrels of South Sudan crude oil.

Sudan justifies the fee on the grounds that South Sudan has not paid for use of northern export facilities since its independence. Khartoum is demanding $1 billion in fees and $36 per

barrel. Besides the alternative pipeline Juba is looking to reduce its dependence on oil revenues which constitute 98 per cent of its income.

When completed, the Lamu Project is expected to come with road, rail and pipeline links to Southern Sudan and Ethiopia.

Others are an international port in the Indian Ocean town, an airport, and resort cities along the corridor.

For Kenya, the move comes just months after the overthrow and subsequent execution of former Libyan strongman Muamar Gaddafi dashed hopes for a similar pipeline extension project to link Eldoret and Kampala.

Unlike the Kenya-Uganda pipeline which was to be constructed on a Public-Private Partnership basis, the deal signed yesterday gives Southern Sudan ownership of the pipeline project but the two nations will negotiate transit fees.