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A rebellion in South Sudan has already slashed oil output by around 100,000 b/d. Production from Unity State, amounting to more than 40,000 b/d, has completely ceased and there has been an estimated drop in output of more than 50,000 b/d from fields in Upper Nile State. In Unity State, output from the Thar Jath field on Block 5A, operated by the Sudd Petroleum Operating Company (SPOC) of Petronas and India’s ONGC Videsh, and the Unity field on blocks 1a and 1b, operated by the Greater Pioneer Operating Company of China National Petroleum Corporation (CNPC), Petronas and ONGC, was shut down after rebels took control of the area.

With the threat of another pipeline shutdown averted, South Sudan’s oil production is expected to increase from about 180,000 b/d to 200,000 b/d in the coming weeks, and to at least 250,000 b/d by year-end, according to oil industry sources in Juba. During a one-day summit in Khartoum on 3 September with South Sudan’s President Salva Kiir, Sudanese leader Omar Hassan Al-Bashir agreed to reverse his decision, announced on 9 June, to stop receiving, processing and transporting crude from South Sudan within 60 days. Under pressure from oil companies and foreign governments, Bashir had already twice delayed the anticipated shutdown, originally scheduled for 7 August, to 22 August and then to 6 September.

On 27 July, Sudan’s oil ministry informed oil companies that it had put back the scheduled date for shutting down the oil export pipelines from 7 August to 22 August. The decision followed a request from African Union (AU) mediator Thabo Mbeki and the Chinese government to allow more time for negotiations between Juba and Khartoum. South Sudan only resumed oil production in April after a 15-month closure of the pipeline network, and the extension is the latest in a series of twists and turns that have made the outcome of negotiations difficult to read.

In the latest twist in the difficult relationship between Sudan and South Sudan, Khartoum has vowed to close its pipeline infrastructure to South Sudanese oil, just three months after an agreement was reached to resume exports after a 15-month hiatus. But there is still scope for an agreement before the shutdown is implemented, sources in Juba and Khartoum tell African Energy.

Faced with fuel security issues following the independence of South Sudan, Sudan has started using 10% ethanol mixed into petrol and plans to expand production for export. “Ethanol has been formally recognised as a fuel in Sudan,” Kenana Sugar Company managing director Mohamed El Mardi El Tegani told the Brazil-Arab News Agency during a conference on food security in the Arab world on 20 May in Khartoum. 



Ethiopian Electric Power Corporation (EEPCo) has signed a $1.4bn agreement with China Electric Power Equipment and Technology Company (CET), part of the State Grid Corporation of China, to build a 619km double-circuit 500kV AC transmission line to connect the 6,000MW Grand Renaissance dam to the grid. The project is expected to be implemented in stages between 2014 and 2016. The work will also include construction of a 98km double-circuit AC transmission line and two new 500kV substations as well as expanding three 400kV substations.

The resumption of oil production in South Sudan has given new impetus to the country’s refining plans. Two facilities are planned for construction this year: a 5,000 b/d plant at Bentiu in Unity State, and a 10,000 b/d plant at Thangrial, in Melut county in Upper Nile State. South Sudan has no refining capacity, having relied in the past on imports of refined products from neighbouring countries such as Sudan and Uganda. The Bentiu plant is being developed by Russia’s Safinat Caspian Oil Refining Company, which signed a memorandum of understanding in December 2012 with energy minister, Stephen Dhieu Dau and Unity state governor Taban Deng Gai to build the refinery.

South Sudan energy minister Stephen Dhieu Dau was due to hold an official ceremony on 27 April to mark the first oil flows from Unity State into a pipeline to Sudan operated by Greater Pioneer Operating Company (GPOC). The flow of oil from Upper Nile State into the second export pipeline to Sudan, operated by Dar Petroleum Operating Company (DPOC), was due to begin on 30 April. Though the Ministry of Oil in Khartoum reported the arrival of a small test shipment from the South in early April, the full-scale resumption of both pipelines has been delayed and no new date has been set for either, according to sources in Juba.

After 15 months of impasse, Sudan’s Ministry of Oil has announced that initial quantities of crude from South Sudan have reached its territory in line with a co-operation agreement signed on 12 March. Under-secretary at the Ministry of Oil Awad Abdul Fatah told AFP that “we’re really in a hurry to do things quickly” and “we’d like for the money to start flowing as soon as possible”. South Sudan suspended oil production in January 2012 in protest at unreasonable transit fees charged on its exports on the way to Port Sudan by the government in Khartoum. The blockage has cost both countries heavily.

After more than a year of blockage, the detailed provisions in the latest deal reached by negotiators from Sudan and South Sudan mean oil could start to flow again within weeks. The deal was reached in the early hours of 12 March after almost a week of talks in the Ethiopian capital, Addis Ababa. An implementation schedule has been agreed by the two sides that demands a resumption in oil production be mandated by the two governments by 24 March. South Sudan halted oil exports via Sudan in January 2012, after the Khartoum government began to confiscate South Sudanese oil as payment for what it claimed were unpaid transit fees.

With Khartoum’s finances in disarray following South Sudan’s independence (it has lost nearly three-quarters of its crude production, which was around 450,000 b/d in H1 2011), China has agreed to provide support.

President Omar Hassan Al-Bashir inaugurated the Roseires dam expansion on the Blue Nile on 1 January as part of celebrations marking the 57th anniversary of independence. China International Water & Electric Corporation carried out the expansion of the dam on the Blue Nile some 550km south-east of Khartoum.

The presidents of Sudan and South Sudan have agreed (again) to the establishment of a demilitarised buffer zone critical to the resumption of oil exports, but the details have yet to be elaborated. Negotiations in Addis Ababa on 4-5 January reached some conclusions but failed to resolve some critical issues, including the future of Abyei

Negotiations on avoiding further conflict continue, following the Agreement on Oil and Related Economic Matters reached by the two Sudans on 27 September.

There is now hope for economic and military stability in both countries, but ongoing disputes over border issues and the status of Sudapet could still thwart co-operation, writes Hugh Boylan.