Plans by South Sudan to build an alternative pipeline through Kenya are expected to acquire fresh urgency in coming weeks as Juba shops for a route to export its oil following the closure of its current transport facility.

Juba on Friday announced it had decided to shut down the oil pipeline that runs through North Sudan to the export terminal at Port Sudan on the Red Sea, citing endless row with Khartoum.

Information minister Barnaba Marial Benjamin said the decision was reached at a Council of Ministers meeting chaired by President Salva Kiir on Friday and followed the recent failed talks in Addis Ababa.

South Sudan accused its northern neighbour of imposing a “per barrel penalty for secession.”

South Sudan, which gained independence from Sudan last July, is entirely dependent on oil revenues to meet 98 per cent of her budgetary obligations.

But Petroleum and Mining minister Stephen Dhieu said the government will adapt “new measures to deal with the new situation” and insisted his country could “also exist without oil.

We are able to run government affairs for the next 18 months without oil revenue.”

Mr Dhieu said there are only two conditions that may necessitate the reopening of the pipeline: “Either Khartoum accepts a fair deal with us and accept our offer by settling the financial proposal or we pay them a transit fee which wil not be more than $1 per barrel.”
South Sudan has been paying about $7 per barrel for transportation of its oil through Sudan.

Khartoum wants Juba to pay additional transportation fee of $32 per barrel, including a $22.8 transit fee. South Sudan has rejected the demand, calling it “looting in broad daylight.”

The shutting down of the pipeline, analysts warned, could worsen the increasingly frosty relations between Juba and Khartoum, putting East African Community States — which have been keen to prevent Sudan and South Sudan from sliding into full-blown war — in a tight spot.