from Africa in Transition

Sudan-South Sudan Oil Deal

August 06, 2012

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The agreement between Sudan and South Sudan over oil pipeline fees opens the way for South Sudan to renew its oil production and ended an impasse between the two states that had threatened to lead to war.   While the New York Times, citing  Khartoum media, reports that South Sudan will pay $25.80 per barrel to transit the pipeline to Port Sudan from which the oil is exported, more recent reports have cited the agreement at close to $10 per barrel.

During her visit to Juba, South Sudan’s capital, Secretary of State Hillary Clinton had publicly urged the two states to reach an agreement.  President Obama issued a statement August 4 welcoming the agreement and also praising the African Union High-Level Implemention Panel, led by former South African president Thabo Mbeki “for its determined and skilled leadership in bringing about this agreement.”  In her own statement, Secretary Clinton said that it reflected “a new spirit of compromise on both sides.”  She also praised the “courage” of the Juba government.

If implemented and the oil starts to flow, the financial problems of both Juba and Khartoum will ameliorate, and the ground may be prepared for agreement of other, outstanding issues, such as border demarcation.  However, there is a long history of failed or incomplete deals between Khartoum and Juba.  Khartoum has long insisted that a security deal must precede oil arrangements. This time, however, African Union and Obama administration involvement may make it more difficult for either side to walk the deal back.