South Sudan-Kenya pipeline is "uneconomical"

Jul 05, 2010 02:00 AM

Sudan's petroleum minister and leading Southern Sudan ruling party official described a proposed pipeline to take oil from Southern Sudan to world markets through Kenya as, "uneconomical." Dr Lual Deng, minister of petroleum in the National Unity Government told the independent daily, Khartoum-based Al-Akhbar that such pipeline, "is not economical and it will be expensive."
"If you are forced, economy does not make sense, but under peaceful conditions we will continue to use existing facilities," he further said referring to the use existing pipeline transporting oil to Port Sudan in case of southern Sudan independence.

Though most of oil reserves are in the South, downstream facilities like pipelines, storage and refinery are in the North. Sudan produces currently an average of some 485,000 bpd. Sudan has a number of pipelines, mostly in the North, extending over 3,700 km, with a capacity to carry 1.5 mm bpd and storage facility with 4.8 mm barrels capacity.
The Japanese company Toyota has been floating an idea of constructing a pipeline from Southern Sudan to Kenya with an estimated cost of $ 1.5 bn, though some experts believe such a pipeline may cost several bn dollars given the tough topography of the region and its length over 3,600 km and that it may need years to complete a credible feasibility study and years to construct, provided that finance is guaranteed.

The semi-autonomous South Sudan will hold a referendum on self determination in January 2011. The proposed pipeline would vastly reduce the need for post-referendum economic and political cooperation between the South's ruling party and their erstwhile foes in the North.
The separation of Sudan into a two states will deny the North billions of dollars in revenue generating from vast oilfields in the south of the country. Currently the North and the South are splitting the proceeds of crude in accordance with the Comprehensive Peace Agreement (CPA) signed in 2005.

Source / Sudan Tribune
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